The British pound has broken out to the upside during the trading session on Wednesday, as the Labour Party in the United Kingdom have suggested that they are willing to accept a delay in the Brexit. If that’s going to be the case, then although we have already seen this market price much of that end, it looks as if the confirmation is all that was needed to break above the massive downtrend line from the previous descending triangle, and that of course the 200 day EMA.
GBP/USD Video 24.01.19
It’ll be interesting to see how this plays out, because a lot of algorithmic traders have systems that use the 200 day EMA as a trend detection. In other words, if we are above it, we are now in and uptrend. I think that the market has further to go, perhaps as high as 1.33 given enough time. However, keep in mind that this pair is driven by algorithmic systems reading headlines out there, and therefore we could get a lot of volatility on the way higher. That being the case, you should be somewhat cautious about your position size, but recognize that clearly we are not looking to short this pair anytime soon.
In fact, if we were looking to short this pair, it’s not until we break down below the 1.2850 level that you can make a serious case for doing so. Ultimately, this is a market that looks likely to grind its way to much higher levels.
