GBP/USD Forecast: Sitting Still the Next 24 Hours
The British pound has been shopping around for several days, and I think at this point we are simply trying to digest some of the losses that Sterling has seen. If that’s the case, it’s difficult to imagine that today will see a lot of buyers or sellers coming into the market trying to push currencies around heading into the weekend. Ultimately, I think we will probably just sit here during the next 24 hours, and perhaps trying to toward the Monday session is probably the best way to go going forward.
That being said, if we do break to the upside, I will be a buyer. The 1.2250 level has been resistive, but I think there’s even more resistance closer to the 1.2350 level that extends all the way to at least the 1.25 handle. I would love to sell signs of exhaustion in that area, as it would give us a little bit more traction in room to move to the downside. That being the case, we also have to pay attention to the 50 day EMA which is pictured in red on the chart and tends to offer quite a bit interest for traders.
Looking at the chart, I think it’s very likely that we are going to go down towards the 1.20 level underneath, an area that is a large, round, psychologically significant figure. A breakdown below that level opens up the door to the 1.15 level underneath, and I do think it eventually happens. We are awaiting some type of resolution to the Brexit and will be at least until the end of October. There’s no reason to believe that the Europeans and the British are going to come together with some type of resolution between now and then. Having said that, the question now is whether or not there’s going to be a deal at all. I suspect it’s very possible there won’t be.
Again though, I much more comfortable fading rallies than I am selling this market on a break down. This gives us an opportunity to pick up a little bit of runway before we take off to the downside again. I have no interest in buying this pair until we can get some type of resolution to the Brexit currently see a significant amount of progress made in the Brexit deal, something that has remained rather elusive.
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