Brexit remains on the front lines. British Members of Parliament on the opposition party as well as rebels from the conservative party voted on Tuesday, their first day back after summer break, to take back control of the parliament agenda. This is following Prime Minister Boris Johnsons suspension of parliament till mid-October. As a result, the PM is expected to call for a snap general election, the only problem is that he has thrown out, or took away the whip as they say, from 21 Conservative MPs that voted against the government on Tuesday. This means that they can not stand for the Conservative Party at the snap general election. PM Johnson stated in the House of Commons that the result of the vote means that “parliament is on the brink of wrecking any deal that we might be able to strike”.
On Monday, we reported on GBP USD, the pair was moving to the downside, it hit all our targets and actually surpassed the 2017 low at 1.19860 on Tuesday evening. The pair has created a new low at 1.19583.
The question is, what now for the British Pound? The thing is, that this big bullish move for GBPUSD has 2 causing factors. Positive Brexit notes triggered a bounce because so many traders were trading to the downside, top that off with the weakening US dollar following worse than expected ISM Manufacturing PMI yesterday and there’s your bullish rally. Will it hold? Probably not. First Johnson has to call for an election, then get 2/3 of the MPs to back the election in order for it to go forward. All this will lead to more tension, confusion and uncertainly that is likely to bring the cable back down.
On a DTF I’ve identified a trend line down. On this TF, we also see that the price respected the trend line as well as the 61.8% FIbo level on August 27th.
Switching to our 4HTF – the trend line is located at about the same level as the 50% Fibo. Both Parabolic SAR and MACD are showing a reversal to the upside, but we are going to wait for the Ichimoku cloud signal if we want to trade Long.
If the price simultaneously breaks the trend line and 50% Fibo as well as closes above the Ichimoku cloud we can consider LONG position with target area at 61.8% Fibo 1.23044. I believe there would have to be a major breakthrough in the Brexit negotiations to help the cable break above resistance at 61.8% Fibo.
SHORT target areas will be 1.20905 (23.6% Fibo), following that the previous 2019 low at 1.20143 and then the newly created low at 1.19583.
On Monday, we reported on GBP USD, the pair was moving to the downside, it hit all our targets and actually surpassed the 2017 low at 1.19860 on Tuesday evening. The pair has created a new low at 1.19583.
The question is, what now for the British Pound? The thing is, that this big bullish move for GBPUSD has 2 causing factors. Positive Brexit notes triggered a bounce because so many traders were trading to the downside, top that off with the weakening US dollar following worse than expected ISM Manufacturing PMI yesterday and there’s your bullish rally. Will it hold? Probably not. First Johnson has to call for an election, then get 2/3 of the MPs to back the election in order for it to go forward. All this will lead to more tension, confusion and uncertainly that is likely to bring the cable back down.
On a DTF I’ve identified a trend line down. On this TF, we also see that the price respected the trend line as well as the 61.8% FIbo level on August 27th.
Switching to our 4HTF – the trend line is located at about the same level as the 50% Fibo. Both Parabolic SAR and MACD are showing a reversal to the upside, but we are going to wait for the Ichimoku cloud signal if we want to trade Long.
If the price simultaneously breaks the trend line and 50% Fibo as well as closes above the Ichimoku cloud we can consider LONG position with target area at 61.8% Fibo 1.23044. I believe there would have to be a major breakthrough in the Brexit negotiations to help the cable break above resistance at 61.8% Fibo.
SHORT target areas will be 1.20905 (23.6% Fibo), following that the previous 2019 low at 1.20143 and then the newly created low at 1.19583.