GBP/USD – H4
Our Expectations – Despite the gap on opening last night, the pair remains on the bearish short-term trend, as the base of Boris Johnson’s departure will probably send the pounds to new bottoms. This afternoon, Prime Minister Teresa May accepted Boris Johnson’s resignation as Foreign Minister and announced that his deputy would be announced shortly. The Prime Minister thanked Boris for his work, but GBP investors do not seem to feel that way. The pound continues to be under pressure, and if we look at Price Action, it seems that Short sellers have no intention of giving up.
Technically, the pair is in the mid-term downward channel, whose lowest point, already tested 50% Fibonacci correction of the main upward trend. Given the background and the return of the price back to the downward channel, creating a false break, I expect the downward movement to remain and by the end of the week to watch a new support zone test between 1.3020 and 1.3080. In terms of indicators, 50 and 200SMA remain sword-shaped, and DeMarker turns and points downwards, coming out of the over-purchase area.
Entering current levels would be too risky. While it is unlikely, the better option is to wait for an upward price correction and then to position Short with SL over the local high.
Trader Petar Milanov