The British pound has fallen yet again during the trading session on Friday, reaching towards 1.2740 level. At this point, I suspect the next target is going to be 1.27, and then maybe even as low as 1.25. I must admit that I have been a bit surprise that just how bearish this is been, but sooner or later we will run out of sellers. Given enough time, that supportive candle should be an excellent buying opportunity as it’s hard to believe that the British will do something to calm the market down. However, we need some type of daily supportive candle to even contemplate buying, and right now it looks almost impossible to try to catch this falling knife.
GBP/USD Video 20.05.19
However, if we did turn around and break above the 1.28 handle this could bring in a lot of short covering which could send this market all the way back to the 1.30 level. At this point, it’s a matter of waiting for the right set up, and we clearly don’t have it quite yet. At this juncture, I suspect it’s a simple matter of letting the market overreact a little bit further, as very emotional markets like this will tend to get ahead of themselves and get into an overbought or oversold position. It is only a matter of time before we get that, but in the short term we simply must wait for the right opportunity to present itself. Right now we clearly don’t have it. Selling this market right now would be chasing the trade, which is a great way to lose money.
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This article was originally posted on FX Empire
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