- The GBP/USD exchange rate displayed a significant rebound during Tuesday's trading session, benefiting from a decline in the US dollar.
- The break above the 50-Day Exponential Moving Average (EMA) suggests the likelihood of continued upward pressure.
- However, whether this breakout will lead to a longer-term move remains uncertain due to concerns surrounding the global economic situation, which generally favors the US dollar, as money could run into the safety of the Treasury markets.
Be Prepared for Considerable Fluctuations
Given the current market conditions, it will be intriguing to observe how the situation unfolds. The markets are expected to remain turbulent, marked by high levels of uncertainty. Additionally, it is worth noting that we are entering a consolidation phase that has persisted for some time. In other words, the trading action is characterized by back-and-forth movements, with the 1.2350 level providing support and the 1.2550 level serving as resistance above. The 50-Day Exponential Moving Average (EMA) attracts significant attention, but it is unclear whether we will continue to witness sideways action or a decisive move. At the end of the day, it is likely that this pair will be noisy more than anything else.
At this juncture, it seems that the market will likely engage in range-bound trading. If you possess a reliable range-bound trading system, employing it could prove advantageous going forward. The markets currently lack a clear direction for a sustained move, indicating the uncertainty prevailing among investors. However, if the market were to break below the 200-Day EMA, it could trigger a substantial downward move towards the 1.1850 level in the long term. In such a scenario, I would adopt an aggressively short stance on this currency pair. A breakdown below the 1.1850 level could potentially open the door to a bear market.
In summary, the British pound experienced a significant bounce during Tuesday's trading session, benefiting from a weaker US dollar. The break above the 50-Day EMA suggests continued upward pressure. However, uncertainties surrounding the global economic situation favor the US dollar, making it challenging to predict a longer-term trend. The markets are expected to remain volatile, characterized by back-and-forth movements. Traders should focus on short-term charts and be prepared for considerable fluctuations. While range-bound trading seems probable, a breakdown below the 200-Day EMA could trigger a substantial downward move. Adopting a cautious and adaptable approach will be crucial in navigating the current market environment.
Ready to trade our Forex daily analysis and predictions? Here’s the best forex trading company in UK to trade with.