- The GBP/USD has drifted a little bit lower during the trading session on Monday, as we still wait for a lot of liquidity and volume to come back into the market.
- At this point, the market is trading between the 50-Day EMA underneath, and the 200-Day above.
- The moving averages are very flat, so it’s likely that we will continue to see a lot of nothing between now and the end of the week when we get the Non-Farm Payroll announcement.
If we turn around and break down below the 50-Day EMA, then it’s possible that we could go down to the 1.18 level. In that scenario, we would almost certainly see the US dollar strengthening across the board, not just against the British pound. Because of this, look at this through the prism of a market that is lining up for some type of move, and it will probably be based upon the US dollar more than anything else.
We Will See a Lot of Noisy Behavior
On the other hand, if we turn around and break above the 200-Day EMA, that could open the possibility of a move to the 1.2450 level, an area where we have seen a lot of selling pressure previously. If we can break above the 1.25 handle, then it’s possible that the British pound can really start to take off to the upside and continue going higher. Regardless, this is a market that I think will see a lot of noisy behavior, but ultimately, we will make a bigger decision.
Over the last 2 weeks, we’ve seen this market die down, but that’s true across the Forex world. I don’t see that changing between now and Friday, but I am cognizant of the levels that need to be paid close attention to. By the time we get to Monday of next week, we should see quite a bit more in the way of volume, so therefore the moves might be a little bit more believable in that situation. Once that happens, then we could get a move for the next month or 2, as we continue to see a lot of momentum picking out, opening the possibility of a situation where we have a much more substantial trade. However, you need to let the market tell you which direction it wants to go via a large impulsive candlestick.
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