In the early US session, the GBP/USD pair is trading below the 200 and 21 day EMA on the 1 hour chart. It is holding at 1.3278 under strong downward pressure. It is likely that we will still see a continuation of the bearish trend on the pair in the following days. The price left a daily low of 1.3220.
This fall was in part triggered by the lack of progress on the Brexit deal, the strengthening of the USDX this morning, and the fall of the global stock markets which added some more pressure.
The main negotiator on Brexit from the European Union, Michel Barnier, informed the national ambassadors on Monday, he was very pessimistic about the possibility of sealing a trade agreement with the United Kingdom. On the other hand, Boris Johnson is ready to cancels talks on Brexit if the EU refuses to budge on their demands last minute.
On a technical level, you can see that GBP/USD has left some inverted pennants, which is a sign of weakness and a trend reversal in the short term. As long as the pair remains below the 200 EMA, around 1.3375, it is likely that any attempt to break through this area would be a good opportunity to sell the British pound.
The pair will find strong resistance at the 5/8 Murray lines if it wants to continue with the rebound to 1.3375. If there is no breakout from this 5/8 Murray level, it would be a good opportunity to sell the pair with targets at 4/8 Murray at 1.3183.
The eagle indicator on the H1 charts has touched the oversold level. The rebound is likely to continue to the resistance zone at the 200 EMA which will allow to sell this pair again.
Market sentiment dropped -10% this morning, now leaving 52% of investors who are selling the pair. We will probably see a stronger drop in the next few days to the 1.31 and 1.30 area. We must first wait for a technical rebound.
Trading tip for GBP/USD for December 07 – 08
Sell al 1.3305 (5/8 Murray), with take profit at 1.3260 and 1.3185, set stop loss above1.3340.
Sell if price pulls back at 1.3375 (EMA 200) with take profit at 1.3305, 1.3260 and 1.3181, set stop loss above 1.3420.
The material has been provided by InstaForex Company – www.instaforex.com
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