- The GBP/USD has been showing resilience against the US dollar in the face of a lot of noisy and choppy behavior during Monday's trading session.
- Despite the market being stuck in a range, it appears that there is quite a bit of support underneath, and we have already turned around some of the losses.
The market has been consolidating with stubborn bullish pressure, and this may continue to be the case in the short term. The floor for the market is currently at the 1.2350 level, and if the market were to break down below that level, it would be a very negative sign. In this scenario, the market would also break below the 50-Day EMA, a widely followed technical indicator by many traders. Below that level, the market could drop down to the 200-Day EMA, closer to the 1.22 level.
Despite concerns about global growth and safety, the British pound has been more resilient than most other currencies. As inflation in England continues to rise, it's likely that the currency will continue to strengthen. However, if there is bad news on the horizon, we may see a run towards the US dollar.
Noise Ahead
In the short term, traders should expect a lot of noise between the current level and the 1.2350 level. However, longer term, the market is expected to eventually break out of this range and make a bigger decision. Traders should be prepared to follow this breakout and make their trades accordingly.
Ultimately, while there is a lot of choppy behavior and noise in the market, the British pound has been showing resilience against the US dollar. Traders should keep an eye on the 1.2350 level, as breaking down below this level would be a negative sign for the market. However, as inflation in England continues to rise, the currency is likely to continue strengthening, as the Bank of England will have to tighten rates. Traders should expect a lot of noise in the short term, but longer term, the market is expected to break out of its range and make a bigger decision. When it finally does, this should lead to a bigger run in one direction or the other. It’s your job to follow its lead and try not to “front run” the move, as that can cause a lot of whipsaw action in your account.
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