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The GBPUSD has recovered back above that 1.2100 handle into today’s close.
Earlier this morning, the pair was trading well below it. In fact, the pound hit a low of 1.2064.
But as you can see, the GBPUSD has recovered nicely into the close.
I wrote about this 1.2100 area acting as (new) support in Sunday’s forecast.
I even mentioned it last Thursday.
So should you buy GBPUSD now that the pair is back above 1.2100?
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That’s a question only you can answer.
However, I think we have to look at the bigger picture to understand why buying the pound is still a risky endeavor.
First, the pair has been trending lower since March. If we go back even further, we can see that GBPUSD has been trending lower since April of last year.
So the trend is certainly not your friend if you’re long.
Second, descending channel resistance isn’t far away at 1.2300 or just below.
That means it’s going to be difficult to achieve a favorable risk to reward ratio.
All in all, I think we could see GBPUSD head higher, but I’m not comfortable buying the pair given the reasons I just outlined.
I would rather give GBPUSD some breathing room to see what happens at channel resistance near the 1.2300 mark.