Working Its Way In A Bullish Flag

Nov 15,2019

Market Strategist

Following our last week’s report on GBP/USD, the candlestick formation now able to form a bullish flag with a lower low. The pair is currently testing near the top-level of the flag, whereby a breakout will allow the pair to rally higher in the longer term.

In terms of indicators, rebounds from the bottom-level of its flag and 18EMA deny the bearish momentum for the pair. From the MACD, weakness in bearish momentum further supports the pair to extend higher after a successful breakout above its bullish flag. Failure to break above the flag will suggests continuous trading within the area.

From the fundamental point of view, recent support came after Brexit Party Leader, Nigel Farage said that his party would not contest in the December 12 general election, although he is highly unsatisfied with Boris Johnson’s Withdrawal Agreement Bill (WAB). The purpose behind that was to avoid the general election to result in a hung parliament, where no single party can obtain the majority vote.

With the Brexit Party out of the election, PM Johnson’s Conservative Party (Tories) will have a higher chance of winning the election with a majority vote, allowing Johnson to ratify the WAB through the parliament and deliver Brexit once and for all.

Despite recent bearish economic data from the region, the cable was still able to hold its grounds, with Brexit hopes fueling investors’ confidence towards the currency.

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Working Its Way In A Bullish Flag

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