Up, down, up, down, down?

Here we are again in the GBP cycle. Up, down, up, down and now up again, for now. In October Theresa May headed to Brussels full of new ideas and proposals for the withdrawal process. It ended up going nowhere as the EU rejected all her proposals. The spectre of a no-deal Brexit because a real possibility. Yesterday, saw a big gain for the pound as a number of positive headlines crossed the wires. There was the report that the UK financial services sector were ready to finalise a deal as soon as the main Brexit negotiations were over. See here. This was then followed by a Financial Times piece towards the end of the day that the EU was exploring ways of reaching a compromise for the Irish border. See here. So, the mood is optimistic once again in the Brexit cycle.

The last couple of times the market has been optimistic that has been capped by the technical levels of the daily 200 EMA. The daily 100EMA level is a good place to watch as it is also the Weekly resistance point. I would expect sellers to turn up at the 100 EMA and the 200EMA to cap price unless there is some Brexit resolution. The last time I the price was up at the 200EMA level I missed a short entry by a few points. Watch price at these levels in the chart below for new levels to short the GBP from.