GBPUSD: Brexit drama and volatility
Today and in coming few days we expect a lot of volatility in GBPUSD. Brexit talks stuck on Irish border issue and May has tried to extend the transition period beyond December 2020. This move was rejected by virtually everybody and domestic policymaker and public are about to explode. “Sun” citing: “Theresa May has ‘just 72 hours to save her job’”.
Early morning news by Reuters – May is expected to deliver yet another report on Brexit negotiations to the UK’s parliament on Monday. “…95 per cent of the Withdrawal Agreement and its protocols are now settled,” she will say, according to excerpts from her statement to parliament.
On 4-hour chart we observe chaotic swing moves up and down in anticipation of final showdown. Price moved up this morning and approach again the cluster of downward sloping resistance levels 1.3095-1.3115. Above we see another resistance 1.3140 and this area is a serious predicament to further advance of price. As unpredictable as it is now, yet I would bet on short trades from 1.3095-1.3115 and 1.3140 – those are very close to each other and it is a very convenient setup allowing us to place the stop-loss above 1.3150.
While I am generally bearish, however, breaking below 1.3005 could be a tricky one. Beware of false break but if it sustains and happens on a very Brexit-negative news, then there will be a follow-through with substantial leg down. Weekly charts confirm this is very likely scenario.
Break above 1.3140 on positive news will open the road to 1.3450. Therefore, close stops and constant monitoring of news are mandatory in this setup.
Have a nice week and safe trades !