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Christopher Lewis
GBP/USD daily chart, October 02, 2018

The British pound broke down during the day on Friday, reaching towards the 1.3025 level at the time of writing. The 1.30 level underneath is psychologically important, and structurally important for that matter. There is also the previous downtrend line that has shown a proclivity to be important more than once, so I think as we drive down towards that area, there should be a typical “buy on the dips” attitude. At this point, it does look like the market is trying to reassert itself, so I think by the end of the day we should have much more of a clear picture. If we are above the 1.30 level, then we should start to see buyers come back in. Otherwise, if we break down below the 1.30 level on a daily close for Friday, that would be a very negative sign.

Overall, I believe that the selling pressure in the British pound is a bit overdone, so I think we are more than likely going to see the buyers jump in. After all, that has been the way forward for some time. That doesn’t mean that it’s going to be the easiest trade to take, and I certainly wouldn’t jump in with both feet. However, as the trade works out in your favor, assuming it does, then you could add going forward. I do believe that this is the typical volatility that we see after a major shift in attitude, so this should end up being a nice buying opportunity. Otherwise, things could get ugly.

GBP/USD Video 01.10.18

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