- The GBP/USD initially dipped a bit during the trading session on Friday, but then turned around after the jobs number slam back into the 1.21 level.
- The 200-Day EMA sits right there, and it’s an area that’s offered a lot of resistance over the last week or so.
- Because of this, we essentially have gone nowhere but it is worth noting that the weekly candlestick has ended up forming a bit of a hammer, so maybe there’s a chance that we are to break out.
If we get above the 1.21 level on a daily close, that will more likely open the possibility of a move to the 1.25 level or so, which obviously is a large, round, psychologically significant figure, and an area where a lot of people will be paying attention to. If we were to clear that area, then it’s likely that we could go to the 1.30 handle. On the other hand, if we were to turn around and break down below the bottom of the candlestick, then we could go looking to the 1.15 level underneath. That’s an area that had previously been resistant, which of course is going to offer a bit of support underneath, due to the “market memory.”
Expect Volatility in the Short Term
When you look at this chart, you can make an argument for a lot of back-and-forths. Therefore, I’m not overly concerned, and I do believe that if you are a short-term trader, you probably get the opportunity to treat short-term range-bound systems. Keep an eye on those levels that I mentioned previously because they could give you a bit of a “heads up” as to where we go next.
In the short term, I would expect a lot of volatility, but I will most certainly be paying close attention to what’s going on in this vicinity since it is a major point of inflection, especially as we are stuck between the 2 major moving averages, the 200-Day EMA at the 50-Day EMA. That typically leads to some type of squeeze in the market, as momentum picks back up. I don’t necessarily know that it will be easy, but it certainly looks as if we are about to make a move. The resiliency is something that has been impressive.
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