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Christopher Lewis

The British pound has pulled back a bit during the trading session on Wednesday as we continue to see a lot of concerns out there when it comes to risk appetite. The 1.25 level above is a massive resistance barrier and the first thing I would point out is that there has been a very resilient buying pressure underneath, turning the market back towards that level. However, it seems as if the 1.25 level is a bit of a “brick wall”, and therefore it should be noted that the market is probably going to continue to see a lot of negativity. Quite often, you will see something like this form and if this happens two or three days in a row, eventually exhaustion sets and then the market falls.

GBP/USD Video 02.04.20

On the other hand, if we were to break above the 1.25 level it would be a massive breakout that people would be paying attention to, and therefore I would anticipate that a large amount of monetary flow would go running into the British pound. At that point, I would anticipate that the market would go looking towards the 200 day EMA above, and then perhaps even the 1.2750 level. However, the more time we spend just below the 1.25 level, the more likely it is that we see negativity jump into the market and exhaustion take over. If we do break down, which I look at as a breakdown of the Tuesday candle to the downside, this market will more than likely go looking towards 1.20 level rather quickly.

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