Trading opportunities for the currency pair: This pair has been in a sideways trend for half a year (6 months or 128 trading days). Any news about a ‘hard’ Brexit has a negative influence on the British pound. The breakthrough of the minimum from the 7th of February has opened the way to the lower line of the “2-2” channel. The distance to the lower boundary of the channel at 1,2210 is 160 pips while the distance to the upper line at 1.2550 is 180 pips. If we don’t experience an upwards bump today and the pound continues to slide, then it’s better to think about selling.
As the price reaches 1.2210, we will have to keep an eye on price behaviour. If we consider that a triangle has formed from a minimum of 1.1905, then there is a high likelihood of the pound falling to 1.0205 or lower.
If on Monday, the price rebounds from 1.2370, there is a chance of it first returning to 1.2550, and then to 1.2710. I’m allowing for this kind of growth in the wake of an interest rate hike from the US Federal Reserve in June. In such a case, it’s worth keeping a further eye on the dynamics of US bond yields and the EUR/GBP cross. It may be worth opening some long positions over the next few days if the rate restores to 1.2530 and subsequently falls to 1.2420. I’ve shown this forecast on the chart. If the price doesn’t follow my forecast then it’s better to hold off on buying.
Background:
The previous trading idea for this currency pair was published on the 3rd of October. At the time of publication, the pound was trading at 1.2971 USD. Since the 6th of July, the pair has been in a sideways trend within a 6,820 pip range. In theory, I was hoping to see some cyclical movement with the previous correction before Brexit. Traders were planning to buy pounds from the lower boundary of the channel as a bullish signal was generated on the Stochastic oscillator and were looking for an entry point on the smaller timeframes.
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