The British pound had a very volatile session during the Friday trading hours as we had broken above the 50 day EMA but gave back the gains. In fact, at one point we even broke down below the 1.23 level but gained that backed by the end of the day. The British pound was all over the place so all it shows is that there is a lot of noise and jittery behavior.
With even more interesting is that next week we have the Brexit negotiations, which will more than likely be contentious at best. We have already heard a little bit of sniping back and forth between the main participants, so there is no reason to think that we will suddenly see Kumbaya between the two parties. This is decidedly negative for the United Kingdom, but it does not exactly help Europe either. With all that being the case, I suspect that we will eventually see selling of this pair.
For what it is worth, I expect the US dollar to have a bit of recovery next week due to the fact that it is oversold, and the Euro formed a massive shooting star. If the Euro falls, I suspect that the British pound will fall as well. They do tend to move in the same general direction most of the time, and I do not know that it is going to be any different next week. If we do break out above the top of the candlestick for the trading session on Friday that would obviously be a very bullish sign, but I think there is plenty resistance all the way to the 1.25 level to simply wait for another selling opportunity.
If we break down below the bottom of the candlestick from the Friday session that I think we will go looking towards 1.21 handle, but it may take several days to get there as this pair has gotten extraordinarily choppy. The British pound is probably going to continue to struggle overall, and it should not be forgotten that we are still very much in a downtrend. After forming that little “double top” above, it makes sense that we would see a continuation of the downtrend eventually. You can even make an argument for a little bit of an uptrend line being tested during the day on Friday and holding as resistance.
