The lack of progress in the Brexit negotiations are starting to worry pound bulls. In fact, many are already expecting that in 2021, the UK will leave the EU without a trade deal.
The media is also already spreading panic, as a result, people are now buying goods, expecting a shortage.
In terms of the GBP / USD pair, the recent news have resulted in a gap, which is a sharp break in price with no trading occurring in between. Usually, this only happens during the weekend, as it is the only time the market closes. But this gap in GBP / USD appeared on Monday, during the opening of the market.
Although this usually means that trades should be canceled to avoid losing profit, there are cases that gaps could result in corrections. In other words, after a gap occurs, price could reverse to "cover" or "fill" the gap. And since a pin bar has formed in the pair yesterday, this scenario is especially relevant. Thus, we could trade short positions in the GBP / USD pair and gain profit from it.
But the catch is that the positions should be closed once the quote reaches 1.32.
This tactic is an example of Price Action and Stop Hunting strategies.
Of course, traders still need to be careful since this financial market is very precarious. But, as mentioned before, it will give plenty of profit as long as you use the right approach.
Good luck!
