For the GBP/USD pair, the price has settled below the upward trend line, which now speaks in favor of further downward movement. Buyers of the pair failed to overcome the 1.3397 level, from which the quotes rebounded twice. Thus, technical factors now speak in favor of the pound's succeeding fall. And not only technical factors speak in favor of this option. The fact is that the pound has been growing in price for a fairly long period of time. To be more precise, from September 23rd. Moreover, it is still quite difficult to say why the pound has been increasing for so long and as a result, it has grown by as much as 700 points. It is one thing if it was a correction against the previous fall. But the current movement is too strong for a correction. Of course, formally 99% of the main movement is also a correction. However, in our case, the upward movement was still too strong. And most importantly, not justified, from a fundamental perspective.
The fundamentals were rather weak last week. The UK services PMI fell, and no other macroeconomic reports were released in Great Britain. There have been several important reports in America and we can't say they were disappointing. For example, GDP was 33.1% in the third quarter, and orders for durable goods were higher than forecasted. But the pound rose in price anyway, although the most important fundamental topic for it is still the negotiations on a trade deal with the European Union, which is still not in favor of the pound. Last week, talks were put on hold, then resumed, then continued and there were still no results. London and Brussels are simply continuing talks that were supposed to end on the 15th November deadline. Both sides also continue to negotiate in the press, regularly accusing each other of unwillingness to concede, then declaring that an agreement is possible.
No major reports scheduled for release in both the UK and America on Monday. Nevertheless, traders may continue to wait for information regarding trade talks between London and Brussels, since this is still the most important topic for the pound. If we receive information that negotiations have reached a deadlock again, this could contribute to the pound's fall. We are not expecting any important news from America at this time.
Possible scenarios for November 30:
1) Traders failed to overcome the 1.3397 level, afterwards the price fell below the trend line. Therefore, long deals are irrelevant now. You need to wait for a new upward trend to appear or until the 1.3397 level has been overcome in order to expect an upward trend to form.
2) Short deals, from our point of view, are more convenient now, and for a number of reasons. The upward trend line has been overcome, the pound has been growing for a long time, the fundamental background is still not in favor of buyers. Thus, we believe that the downward movement will extend until next week. In order to be able to open short positions, novice traders are advised to wait for the upward correction, afterwards a new sell signal from MACD. Aim for support levels 1.3281 and 1.3242.
