The GBP/USD has found itself failing at the 200-Day EMA, an indicator that a lot of people will, of course, be paying attention to. Because of this, I think we’ve got a situation where the market will continue to be very noisy, but at the end of the day, it looks like this is an area that we just cannot get beyond.
The candlestick for the trading session on Tuesday does suggest that we are going to see further selling pressure, and I do think that it is probably only a matter of time before that truly takes over. Because of this, I believe that the market is probably going to finally break down below the 1.20 level, opening up a much bigger drive, down to the 1.16 level. With that being said, I suspect that we’ve got a situation that the market that will be paying close attention to the 50-Day EMA as well, near the 1.1928 level. If we break down below that level, then that’s when we will more likely see an acceleration of selling pressure and downward momentum.
Expect Noise
On the other hand, if we turn around and take out the top of the candlestick for the trading session on Tuesday, then it opens the possibility of an attempt to get to the 1.22 level. If we can break above the 1.22 level, then the market is likely to go looking to reach the highest again, just above the 1.24 level. The 1.25 level is a large, round, psychologically significant figure that a lot of people pay close attention to, and therefore think that will be about assizes market can go in the near term.
That also would assume that people would be looking to short the US dollar, and in a situation where we have a lot of economic concerns around the world, it doesn’t make sense to short the greenback. Yes, I realize that the Federal Reserve is probably closer to the end of the rate hiking cycle, but at the same time, traders will start to focus on the economy itself, and that of course favors the greenback as the rest the world is struggling quite a bit more than the United States. Expect noisy behavior, but it’s not till we get the jobs number in January that I expect the volume to pick up to reasonable levels.
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