GBP/USD Price Forecast – British pound sits on major support

The British pound initially tried to rally in the “risk on” attitude that we had formed after the Americans and the Chinese called a bit of a cease fire in the trade war. Overall, I think that we are getting ready to break down major support though, so that could signify the next major move.
Christopher Lewis
GBP/USD daily chart, December 04, 2018

The British pound is testing the 1.27 handle, and quite frankly if we can break down below there on a daily close I think that it opens the door for an extension of the descending triangle that I have been talking about. The descending triangle signifies a potential move down to the 1.22 handle, based upon the height of the shape itself. Ultimately, I think that rallies will continue to offer selling opportunities though, so even if we don’t break down yet, I think it’s only a matter of time before we returned to the lows.

GBP/USD Video 04.12.18

At the top of the triangle, there is a downtrend line like you would expect. If we can break above that downtrend line, that would change a lot and probably send the British pound towards the 1.35 handle above. That’s an area that I think signifies a complete trend change if we can break above it, so I would be very interested in going long at that point. However, that doesn’t happen until the Brexit is negotiated and settled, something that looks very unlikely in the short term. I do believe that we will see a major break down in the British pound yet again, because we are getting closer to the reality of a “no deal Brexit.” If that’s the case, the pound will get hammered for a while, but eventually it becomes a value play.

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