Investing.com investing.com 05 Jan, 2021 17:15 am

Chart Of The Day: Pound Sterling Set To Drop Toward 1.34

Chart Of The Day: Pound Sterling Set To Drop Toward 1.34
Market Overview Analysis by Investing.com (Pinchas Cohen/Investing.com) covering: GBP/USD. Read Investing.com (Pinchas Cohen/Investing.com)'s latest article on Investing.com

Monday night, UK Prime Minister Boris Johnson announced he was initiating a third, national, COVID-19 lockdown, beginning today, Tuesday.Ironically, since the Prime Minister uttered the dreaded words, the pound has been consolidating and rising.The price has gone up throughout a rising flag formation, following the plunge, or the “flag pole,” as short sellers were covering their positions, to return contracts to their brokers.If it does, it will repeat the previous sharp drop once short sellers are done covering their tracks.

Conservative traders should wait for the pound to fall below yesterday’s low, to extend the downtrend, then wait for another return-move, to confirm the flag’s resistance.Moderate traders would wait for the same pattern, but for a better entry, closer to the expected resistance, not to increase their faith in the downtrend.

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