This morning of the American session, the GBP/USD pair is trading at 1.3427 below the SMA of 21 and below the 6/8 of Murray. At this time, it is under downward pressure, as it is located below the channel bearish trend; drawn from the high point of December 17 at 1.3621.
Undoubtedly, the markets are monitoring the Brexit developments. In recent weeks, there have been significant advances. The controversial point, which is being considered now, is on the fishing rights of the United Kingdom.
"Under the new UK offer, the EU would reduce the value of fish caught in UK waters by 35% over a five-year transition period, a big drop from last week's demands that the EU reduce the value of their catches by 60%".
Any news regarding Brexit will undoubtedly cause volatility in GBP/USD. Therefore, we must keep an eye on the price action.
In 4-hour charts, we can observe a trend continuation pattern called a pennant. If the price breaks this pattern, we can expect a new bullish momentum to the 1.36 zone in the short term. However, while it is trading below 1.3427, we wait for the pair to consolidate.
On the chart, you can see that yesterday the pair bounced off the bottom of the bullish channel, 1.3186 level, and at that point the GBP/USD pair has bounced to 6/8 Murray, and again breaking the EMA 200 periods. Now GBP/USD is trading above this level. Therefore, if it sustains above 1.3320, there is a possibility of a consolidation for further bullish momentum.
Market sentiment for this morning of December 22, shows that there are 56% of traders that are selling this pair, 6% above balance, which, we should expect this figure to increase for the GBP / USD , manages to exceed the maximum of December 17 at 1.3620. Otherwise, it is likely to trade only within the trend channel.
Trading tip for GBP/USD for December 22 – 23
Buy above 1.3470 (SMA 21) with take profit at 1.3549 (7/8) and 1.3670, stop below 1.3425
Buy if rebound at 1.3325, with take profit 1.3427 and 1.3549, stop loss below 1.3290.