The British pound has gone back and forth during the trading session on Friday, reaching back and forth through the 50 day EMA. Ultimately, this is a market that I think will probably go looking towards 1.30 level again, which of course is a large, round, psychologically significant figure. By breaking above there, then the market is likely to go looking towards the 1.31 handle, and then possibly make an even bigger move. Looking at this chart, it appears that we have a “zone of support” extending from the 50 day EMA underneath to the 200 day EMA underneath there. Because of this, it looks likely that we will continue to find reasons for buyers to get involved.
GBP/USD Video 19.10.20
If we were to break down below the 200 day EMA underneath, that means we would be trying to take out the 1.2750 level. If we break down below that level, then it is likely that we drop a bit further. With that being the case, I think that we continue to see plenty of value hunting, but we also have to worry about the possibility of the random Brexit headlines coming out and smashing any attempt to recover. All things being equal though, I do think that it is easier for this market arise than fall in the short term, but never underestimate the ability of both British and European politicians to come in and cause major issues with the markets. Brexit is part negotiation, part politics for the homeland.
Currently, we are watching the children argue about seafood, which shows just how absurd the entire problem has been.
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