The British pound initially tried to rally during the day on Monday but then rolled over to show signs of weakness again. The 1.25 level course will attract a lot of attention, as it is considered to be a large, round, psychologically significant figure. That being the case, it’s natural that we would see buyers and sellers fighting at this level. The Moving Average Convergent Divergence indicator underneath is going higher, while Price is falling. Quite frankly we quite often see this type of divergence before he turned around. Ultimately though, we are in a downtrend so the upside is somewhat limited.
GBP/USD Video 16.07.19
For what it’s worth, the weekly candle stick last week ended up being a hammer, so we can break above the highs of the Friday session, it’s very likely that we should then go looking towards the 1.2750 level above. If we can break above there, then it’s likely that we could go to the 1.30 level after that. To the downside, if we were to make a fresh, new low, the market probably breaks down to the 1.2250 level after that, possibly even the 1.20 level after that.
We are in a downtrend, so it’s obviously easier to short this market than it is to buy it, but ultimately we need to follow what the market does, not what we think it should. Overall, I think we could get a short-term bounce but given enough time I do think that we will continue to find reasons to fall. One of the driving factors of course will be the Federal Reserve cutting interest rates in July, so that could cause a bit of a repricing in the short term.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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