Brexit or not Brexit?

How to work with this article?

The developments of Brexit and the anguish lurking around is a source of grave concern to world public opinion. Even though Brexit is not the only volatility source for GBPUSD now.

Basic arguments

The main reason for GBP strengthening is just another defer of Brexit consideration. While politics continue playing their games, investors preferred other currencies to the Pound. However, on the other hand, USD is also a bit risky nowadays as their trading war with China still has unclear prospects. For now, forward rates support USD with a GBP correction.

Technical arguments

Technically, the situation looks corrective. We can see three prominent peaks, and 2 of them are lower than the maximum point of 1,29 GBPUSD on 18.10.2019.

Big traders positions

Picture 1

Picture 1. A price chart of GBPUSD and a chart of a big traders indicator for 29.09.2019 - 29.10.2019.

As we can see in picture 1, a big traders' position has reached the maximum, and the market is a bit overheated. Generally, it is because of speculators, which means that the price is artificially high, and we can expect a rollback in value. On the other hand, we can assume that the pressure on GBP will slightly weaken due to the release of hedge of some big traders, and this will support GBP.

To sum it up

Undoubtedly, investments in such assets as GBPUSD are connected with an increased level of risk. The general currency situation now indicates the strengthening of GBP. However, at this moment, the majority of factors indicate that GBPUSD will go down. So, in this situation, the most rational strategy will be keeping a moderate position with shares: 80% down and 20% up.

We recommend you to use the following indicators for more efficient opening of trades

• Stochastic
• Bollinger Lines