The British pound pulled back slightly during the trading session on Monday, as the 1.25 level has offered enough resistance to turn things around. Quite frankly, the market had been over bought, so the fact that we would pull back from there makes quite a bit of sense. That being said though, there’s a lot of noise in this area as well, so it makes sense that we were to break down. Underneath, the 50 day EMA could offer a bit of support, as it is turning higher and showing signs of potential buying pressure. Regardless though, the Brexit will continue to cause a lot of issues, as we have no real clarity at this point as to how the whole thing’s going to turn out.
GBP/USD Video 17.09.19
With that being said, I suspect there has been a lot of short covering as of late, not necessarily a huge demand for owning the British pound. The 1.25 level of course offers a large, round, psychologically significant level to trade from so the pullback makes quite a bit of sense. We are in a downtrend, despite what we have seen over the last several days, so I’m looking to sell this pair whenever it shows signs of exhaustion. I do believe that we will go back towards the 1.20 level given enough time, but it doesn’t necessarily mean that were going to get there overnight. By looking for simple exhaustion, especially at large numbers like the 1.25 level, we should eventually see this pair roll over.
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This article was originally posted on FX Empire
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