- The GBP/USD initially rallied during the trading session on Monday but gave back early gains as we continue to see a lot of volatility.
- Keep in mind that it was Martin Luther King Jr. Day in the United States, so that of course has a major influence on where we go as far as volatility is concerned.
- Ultimately, this is a market that I think has been very noisy and will probably continue to be, so you do have to keep that in mind.
The 200-Day EMA sits just below and should offer a little bit of a support area. I think it makes a nice target for short sellers, as we continue to chop around and try to figure out what we are going to do next. If we break down through there, then we could be looking at a move to the 50-Day EMA, which sits closer to the 1.20 area. Anything below their opens quite a bit of selling pressure as it would be a breaking of multiple support levels and could open up the market to extreme pressure.
Looking for Some Type of Momentum
Keep in mind that the US dollar has been beaten up quite a bit as of late, but if we get some type of major “risk off” type of attitude out there, almost certainly favors the greenback. In that scenario, we could see the British packet absently hammered because the United Kingdom has a lot of issues out there when it comes to growth, or perhaps better put, the lack of growth. The shape of the candlestick is a shooting star but considering that it was a major holiday in the United States, I would not read too much into it.
The alternate scenario would be breaking above the top of the candlestick, opening the possibility of a move to the 1.2450 level. That area will continue to be very difficult to break above, as it is backed up by the crucial and psychologically important 1.25 level that has seen quite a bit of action in the past. As things stand right now, I think we are just simply going to grant back and forth, looking for some type of momentum for the next big move, whenever and wherever that will finally occur in this pair.
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