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Christopher Lewis
GBP/USD daily chart, December 26, 2018

The British pound rallied a bit during the trading session on Monday, reaching towards the 1.27 handle. That’s an area that has been massive support in the past, so now it should be massive resistance. At this point, I think that traders will continue to fade rallies, with the 50 day EMA just above offering quite a bit of resistance. If we do break above the 50 day EMA, then the market could go looking towards the 200 day EMA, an area that is massive resistance. It is currently hugging the downtrend line of the descending triangle that I have marked on the chart, so at this point I think it is only a matter of time before the sellers return.

GBP/USD Video 26.12.18

Ultimately, I think that the descending triangle measures for a move down to the 1.22 handle, and that something that will eventually be targeted. Overall, it makes sense that the British pound will continue to struggle due to the Brexit, and all of the uncertainty that comes with that situation. The one thing that is possibly lifting this pair a bit is short covering ahead of the holidays, and of course the Federal Reserve sounding a little bit more dovish than originally thought has had an effect as well. However, I think that it is only a matter of time before the Brexit takes the headlines again, and therefore sends this market much lower. It’s not until we break above the 200 day EMA that I would consider buying this market for a longer-term move.

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