The GBP/USD pair fell significantly during the day on Monday, as we go looking for the 1.29 level below. That’s an area that could cause a bit of support, and the strength of the British pound of course has been rather impressive. If we can hold at the 1.29 level, I feel that the market will probably turn around and try to break out to the upside again. This could be a bit of momentum building, but given enough time we could find ourselves breaking down below there. Even if we did, that’s not necessarily going to be a massively negative sign, as the 1.28 level is even more important as far as I see on the chart. However, if we were to break down below there I think things could get ugly rather quickly.
The importance of the 1.28 handle
I believe that if we can continue to stay above the 1.28 level, it’s only a matter of time before the buyers return. If we do breakdown below there, I think at that point the bullishness and the British pound might be over for several sessions. I recognize that there is going to be a lot of volatility because of the headlines coming out above London and Brussels, and I believe that this will continue to be a difficult market to deal with because of that. Alternately, if we could finally break above the 1.3050 level, the market should then continue to reach towards the 1.3450 level. No matter what happens, you need to be very careful and keep your stop losses in place to make sure that you don’t get sudden reversals working against you. Noise will continue to be extreme in this market for the near future no matter what happens.
Written by FX Empire