Some simple support and resistance lines for GBP/USD. From looking at the chart and how we’ve been trading in the past we could see a drop below the 1.37290 handle before we start to see a range trader confirmation.
As you may be able to identify from the chart above GBP/USD has a habit of range trading before there is a decision this, of course, is largely due to the dollar index also range trading as there isn’t any clear direction indication.
We can use past history to give us some indication of how events will turn out.
Range Trading – If we keep seeing dollar squeezes with Euro weakness then cable should be able to keep its ground and we will identify within the range
Break For Lower Levels – If a dollar squeeze turns into good dollar support and momentum and we see euro strength due to Brexit negotiations not going the way they should this could spark a big G/U sell-off down to the mean level (SMA 100).
Break For Higher Levels – If we see a repeat of how the dollar has been acting (ranging before the dollar index breaks down) and we have good Brexit negotiation news then we could see a spark for the high level of 1.45. Even if we see bad Brexit negotiations we could still see G/U head towards 1.45/46 just down to the dollar weakness.