Tactile Trade Idea. Time to sell GBPUSD?
GBPUSD overbought in the short-term
The pair reversed sharply at the 1.20 lows three weeks ago, and for the past ten days, it's trading inside of a rising channel. The uptrend took GBPUSD almost to 1.2600 (about 600 pips away from the 1.20 lows), but it also reached overbought levels as is shown by our advanced overbought/oversold indicator on the chart.
Now, considering the importance of the resistance here in the 1.2500 wider area, and the exhaustion of the uptrend, GBPUSD looks likely to embark on a correction lower next week.
GBP fundamentals/sentiment also not that bullish
If we also take a look at the fundamentals, they also support what the technicals are saying.
Essentially, there is no progress on Brexit. The situation remains deadlocked, although GBP rallied in hopes of avoiding a no-deal Brexit after the British Parliament ruled out this option by law. However, as we know, things are not that simple because the British Parliament doesn't accept the already offered exit deal either.
So, GBP has reached overbought levels on a fundamental/sentiment basis as well, because anything higher than 1.26 - 1.27 on GBPUSD means that tangible progress on Brexit is achieved. But that is not the case. Hence, the pair is likely to revert lower as no-deal Brexit risks remain high.
This is a potential trade of tactical nature. So, things can quickly change on impactful Brexit related news which could still take GBPUSD substantially higher or lower. So we I'm placeing a tight stop slightly above the breakout point of the trendline, maybe even above 1.2520 to allow some more breathing room for the trade.
