Christopher Lewis
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GBP/USD daily chart, May 06, 2019

The British pound fell hard during the day on Friday as we broke down towards the 1.30 level and even pierced it for a while. That being said, we turned around to gain and form a much more bullish candle than initially thought. While that is a good sign for the buyers, the reality is that the two previous candlesticks are both shooting stars, and that something that should be paid attention to. Quite frankly, anytime I see two shooting stars in a row my interest in the market increases drastically, because it doesn’t happen all the time, and of course it shows that there is significant selling pressure. In this case, it’s the 1.31 level that continues to keep the market down.

GBP/USD Video 06.05.19

If we break down below the candle stick for the Friday session, that opens up the floodgates to the 1.29 handle, and then possibly the 1.28 level after that. The British pound could explode to the upside though, don’t forget that all we need is some type of positive news coming out of the Brexit negotiations, and that could send things much higher. All things being equal though, it seems very unlikely that we are going to get a major change in the attitude of markets in the short term, so I believe that fading rallies will probably continue to be the way that a lot of traders play this market, so perhaps we are starting to see a bit of short covering heading into the weekend as well.

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