Brexit - a situation as at November 19, 2019
In previous articles, we had been continuously reporting on Brexit, the UK's departure from the EU. This was originally to have occured on October 31, 2019. However, Brexit did not happen because the Brexit Agreement was not approved in the British Parliament. The deadlock should be resolved on December 12, 2019, when early elections will take place.
At the moment, there is running a tough election campaign and by the time of the elections no major surprises are expected in terms of Brexit and legislative steps. That is why we temporarily interrupt our series and we are going to publish another article on Brexit in the election week commencing on December 9, 2019.
At this point, let's just recap the GBPUSD currency pair movements in terms of technical analysis.
Technical analysis as at November 19, 2019
On the weekly chart, see Figure 1, we can see that the price has been stagnating for a few days in the range from 1.2780 to 1.3000 and the consolidation continues. The price also broke through the downward trend line at point C, indicating a change in trend.
Figure 1: The GBPUSD on weekly chart
On the daily chart, see Figure 2, we can see that a higher high (point D) and a higher low (point E) were formed, as well as a crossing of the EMA 50 (orange line) above the SMA 100 (blue line) at point G confirms the increasing trend .
The price has now reached the nearest resistance, and one can expect a rebound towards the first support level.
Figure 2: The GBPUSD on daily chart
One scenario for the nearest period is that the price will keep moving in the range between support 1 and resistance 1. The second option is that the support 1 will be broken and then the price could reach a level of around 1.2550 - 1.2650. If, on the other hand, the resistance line 1 breaks, then the price could rise to 1.3200 or eventually to 1.3300.
Resistance 1 is at a level of about 1.3000 - 1.3050. From Figure 1, it is about 78.6 of Fibonacci retracement, and it is also the area from which the previous significant decline was triggered. At the same time, the price stopped at this level on October 21, 2019 and this level is currently tested for the second time.
Resistance 2 is at a level around 1.3150 - 1.3200.
Resistance 3 is approximately between 1.3300 - 1.3370.
Support 1 is now in a zone 1.2740-1.2780.
Support 2 is in a range around 1.2550 - 1.2600. This level is the confluence of the Fibonacci retracement 50.0, see Figure 2, and the breakthrough of previous resistance. Reactions may also occur at 1.2500, where 61.8 Fibonacci retracement is. This level seems suitable for a long speculation.
Support 3 is between 1.2350-1.2400, where the Fibonacci level 78.6 is, see Figure 2.
What to look for before the elections?
Recent events have shown that the GBPUSD pair responds strongly to the conclusions of the preliminary election polls. Also, Nigel Farage's statement on November 11, 2019, when he announced that his party will not compete against Conservative party in those districts where Conservatives won in the previous elections, was positive for the pound.
If Conservatives win, there is a high probability that Brexit with the agreement will occur by January 31, 2020. Therefore, the hints of Conservative party’s lead in election polls are positive for the pound and may lead to its strengthening. For these reasons, we recommend traders to monitor such news continuously.
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