The British pound rallied rather significantly during the trading session on Thursday but found a bit of resistance near the 1.25 handle, an area that is previous support and of course a large, round, psychologically significant figure. Ultimately, this is a market that continues to break down due to the idea of a “no Brexit deal” being very possible at this point. That being said, the Federal Reserve is looking to cut interest rates so that does apply a little bit of upward pressure here. Overall though, this is a market that should continue to be volatile, but negative more than anything else.
At this point, now that we have cleanly broken through the 1.25 handle, it’s very likely that we go down to the 1.2250 level. After that, I think that the 1.20 level will be targeted, as it is a large come around, psychologically significant figure. I have no interest in buying this pair, at this point I see resistance at the 1.25 handle, the 1.26 handle, and then the 1.2750 level. Ultimately, this market is one that should be faded every time it shows signs of strength, and then followed by exhaustion. The 50 day EMA is racing lower and will attract more selling pressure once it gets down to the area we are at. We are in a downtrend, and there’s no reason to fight that anytime soon. With all of that being said, I have no interest in trying to outthink the market, I will simply follow what has been the case for some time.