The pound/dollar pair is trading today in the narrow range and is holding near yesterday’s low. On Monday, the pair declined considerably as the pound dropped across the board following the euro’s trajectory. The pair fell on the strengthening of the US dollar. Besides, a surge in new coronavirus cases in the UK has put additional pressure on the pound. The UK authorities consider tightening the lockdown restrictions to prevent further spread of the virus.
Today, markets are waiting for the Bank of England Governor’s speech which can also affect the pound. In the first half of the day, I expect the pair to go through a moderate upward correction. However, the downtrend should prevail as the pair is still trading in the bear market. A possible pivot point is seen at 1.2875, and I’m going to sell below this level with the targets at 1.2750 and 1.2705. As an alternative, the pound/dollar pair will start to rise and will move above the level of 1.2875. After settling there, it may then head for the levels of 1.2895 and 1.2925.
Yesterday, after reaching the upper border of the inverted triangle, the pair tried to go further up. However, it failed to break through the upward trend line from which the price reversed and moved down. The price has reversed again and is now moving upward to the level of 1.2893, where there is the upper border of the inverted triangle.
Slightly above, there is a downward trend line at 1.2914.
If the price can break through these levels up, the pair is likely to rise to 1.3121. In case the price reverses from these levels, it is likely to go to the lower border of the inverted triangle - 1.2731. The pair may again reverse from 1.2731 and go up. Otherwise, if there is a breakout at this level, the pair is likely to extend the downward movement.