British Pound Sinks for Most of Week

The British pound has fallen rather hard during the course of the trading week to break down through the 1.34 level. At this point, the market looks as if it is going to continue to see that area as important, and it is worth noting that we have recovered to get back towards that area after the “flash crash” that happened after the Russian invasion of Ukraine. Ultimately, this is a market that I think will continue to see some downward pressure, and it is worth noting that the market had been showing a lot of upward wicks over the last couple of weeks, so it does suggest that we were going to fall sooner or later anyway.

GBP/USD Video 28.02.22

On the other hand, if we were to turn around and take out the top of the wicks over the last month or so, that could send the British pound much higher, reaching towards the 1.37 level, and then possibly all the way up to the 1.40 level. However, keep in mind that the market is going to continue to move based upon risk appetite more than anything else, but it is hard to ignore the fact that we have seen a massive downtrend line form and hold for quite some time.

Looking at this chart, I expect volatility, but I think your best trade is probably going to be shorting this market on lower time frames, but the longer term trader is to pay close attention to the 1.32 level and the downtrend line as it could give you an opportunity for a big play. In the short term, I think a little bit of a recovery before falling again could be what we see.

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