British Pound Testing Major Support Region

The British pound has fallen rather hard during the course of the trading session on Tuesday to reach down towards the 200 day EMA, an indicator that of course a lot of people pay close attention to. Now that we have pulled back like this, it is time to start watching this general vicinity to see whether or not we are going to bounce. Quite frankly, we also have the downtrend line from the descending channel that we had been in, so I think that this is going to be a crucial region to watch for a longer-term move.

GBP/USD Video 19.01.22

If we can start to bounce from here, I will probably put a small position on to go looking towards the 1.37 handle. However, if we close significantly below that downtrend line, then I think we will probably test the 1.35 level. A breach of the 1.35 level of course is a very negative turn of events, perhaps sending this market right back into the negativity that we had seen previously. Regardless, this is a market that had gotten far too ahead of itself for a while, so at this point in time it does make a certain amount of sense to simply wait and see what the market does next.

Given enough time, it will give you a sign as to where we are going next, and therefore if you are just patient enough, you should see a clear set up over the next couple of days. That being said, as Jesse Livermore used to say, “Sometimes, we are paid to wait.”

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