GBP/USD Price Forecast – British pound breaks down to kick off week

The British pound has broken below the 1.30 level, which of course is a very negative sign, as we now looks likely to reach towards the 1.2930 level, perhaps even the previous downtrend line which was supportive. Looking at this chart, I do recognize that there is a lot of bearish pressure, but I also believe that the buyers in the value hunters will come back as soon as things calm down. I believe that if we can break above the 1.30 level after that, the market should rally from there and perhaps try to reach towards the 1.31 handle. In the short term, I would step out of the way of this falling knife, because it’s a great way to lose money. You could short this pair, but I would be very quick with pulling the plug on the trade, because this could reverse rather quickly, based upon some type of headline out there that gives a bit of hope for a decent Brexit deal.

Regardless, I think we will continue to see a lot of volatility, and the longer-term thesis of a break out still holds, because quite often you will see a lot of volatility after a major trendline break, which we of course it did have. Being patient and waiting for a buying opportunity might be the best play here, and again I would be interested above the 1.30 level, or perhaps on some type of hammer or candle like that closer to the previous downtrend line.

GBP/USD Video 23.10.18