Whenever a currency or commodity or stock moves rapidly and too far, it sets itself up for a period of consolidation. As you are aware, Sterling has dropped like a stone from its peak, and after reaching its medium-term target of around 1.4570 (discussed earlier in this blog), the currency has been moving sideways. Today, it looks a bit better bid, and there is a chance that some short-covering could kick in. If such a recovery takes place, we should still be on our guard around 1.5365 because the Pound is very much still in a major bear trend, and will surely come down a lot faster than it can climb higher. I have presented a chart with some gann fans on it. There are other reasons why I think the Pound will find it tough to go above 1.5410. But any place near 1.5365 should be enough for those who are still stuck with bad ‘long’ positions in the Sterling Pound to swallow the medicine and take a loss. For those who need to hedge their exposures, this recovery(assuming it happens) will give you a decent level to take action. Enjoy! Ramki.
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