The British pound initially fell during the trading session on Monday after gapping higher, and then fell towards the 1.20 level underneath. That level of course is a large, round, psychologically significant figure, so it’s attracted a lot of attention. All that being said, we had recently been consolidating between the 1.21 level on the bottom and the 1.22 level on the top. We are now retesting that area, and it should be noticed that we have failed to continue going higher.
With that suggests that it is that the market is ready to test the 1.20 level again, and I think that given enough time if we break down below there this market could unwind. With the lack of clarity when it comes to the Brexit, it makes sense that we will continue to see the British pound struggled. On the other side of this equation we have the US dollar which of course is considered to be a safety currency, and a lot of people are looking for that safety. US treasuries have done well, so that continues to drive the value of the US dollar higher in general.
If we do break down below the 1.20 level though, it’s likely that it’s more of a “flush lower” as people begin to worry about the October 31 deadline. There doesn’t seem to be much in the way of a deal coming down the road, so I think we will eventually collapse in this pair, but that will be the beginning of a career making buying opportunity. We are far away from that though, so in the meantime it looks like any time we rally we will continue to see sellers. Even if we were to break above the recent consolidation area, it’s likely that we would then go towards the 1.2350 level, which is the beginning of resistance to the 1.25 level. The 50 day EMA is starting to turn lower in that area as well, so I think longer-term traders would start shorting there. I have no interest in buying the British pound.
With that suggests that it is that the market is ready to test the 1.20 level again, and I think that given enough time if we break down below there this market could unwind. With the lack of clarity when it comes to the Brexit, it makes sense that we will continue to see the British pound struggled. On the other side of this equation we have the US dollar which of course is considered to be a safety currency, and a lot of people are looking for that safety. US treasuries have done well, so that continues to drive the value of the US dollar higher in general.
If we do break down below the 1.20 level though, it’s likely that it’s more of a “flush lower” as people begin to worry about the October 31 deadline. There doesn’t seem to be much in the way of a deal coming down the road, so I think we will eventually collapse in this pair, but that will be the beginning of a career making buying opportunity. We are far away from that though, so in the meantime it looks like any time we rally we will continue to see sellers. Even if we were to break above the recent consolidation area, it’s likely that we would then go towards the 1.2350 level, which is the beginning of resistance to the 1.25 level. The 50 day EMA is starting to turn lower in that area as well, so I think longer-term traders would start shorting there. I have no interest in buying the British pound.