The British pound fell significantly during the trading session on Wednesday, reaching towards the 1.2550 level. That’s an area that should continue to be of interest as we had recently bounced from just below. Obviously, the 1.25 level underneath will probably cause significant support due to the fact that it has not only rallied from that level previously, but it is also a large, round, psychologically significant figure.
GBP/USD Video 04.07.19
To the upside, if we can break above the top of the candle stick for the trading session on Wednesday, it’s very likely that we will go looking towards the red line that I have drawn on the chart, roughly 1.28. This is a market that looks like it’s trying to find a bottom, perhaps due to the Federal Reserve looking to cut interest rates later. Unfortunately though, the British still can get the whole Brexit thing together, so this could be a bit of a laggard.
If we were to bounce from here and test that redline again, we could be looking at the beginning of an inverted head and shoulders, which could open the door to the 1.30 level. Obviously, this is going to be a longer-term trade, as this pair has a lot working against it. To the downside, if we were to break down below the 1.25 handle, the market probably goes looking towards the 1.2250 level, based upon historical charts. With the jobs number coming out on Friday and a major holiday between now and then, we should have an answer in the next few days.
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This article was originally posted on FX Empire