- The trading session on Thursday witnessed a substantial rally in the British pound, indicating the presence of notable upward pressure yet again. However, alongside this bullish momentum, there is also a downward resistance barrier hovering in proximity to the 1.26 level.
- At this juncture, we find ourselves in the process of discerning the direction of a more enduring, long-term trajectory. It's important to acknowledge that market dynamics are poised to continue exhibiting a high degree of volatility.
- The observance of Thanksgiving on Thursday may have factored into the equation, as many Americans were away from their trading desks. It's worth noting that Friday is likely to follow a similar pattern in the United States, with a substantial portion of the population taking the day off in the aftermath of Thanksgiving.
Beneath the current market dynamics, we find the previous upper boundary of the channel we had been navigating, which could potentially serve as a formidable support level. Further down the hierarchy, the 200-Day Exponential Moving Average has already demonstrated its resilience in providing support. Consequently, it's plausible that any potential dip could invite buying interest. However, if the market were to descend below the 1.2350 level, a shift in the prevailing dynamics could ensue.
Market is Currently Revolving Around Speculations
In terms of the bearish scenario, it's pertinent to highlight our ongoing struggle with the 50% Fibonacci level, which could exert its influence on price action. Over the short term, I anticipate the market to continue oscillating within this range, as market participants await a significant catalyst to steer the direction. It's possible that such a catalyst might emerge next Friday, with the release of the jobs report in the United States. Currently, market sentiment revolves around speculations regarding the Federal Reserve's stance, with the prevailing uncertainty centering on whether they will adopt a more accommodative monetary policy or maintain a tightening bias. Some market observers are already speculating about the possibility of the Federal Reserve implementing rate cuts in 2024, although the veracity of such predictions remains uncertain. In the broader market landscape, it is crucial to recognize that inflation rates in the United States wield considerable influence, impacting not only the GBP/USD pair but a spectrum of assets. Consequently, prudent position sizing is imperative, and a close watch on short-term charts may be advisable to navigate these fluid market conditions effectively.
Potential signal: I am still not long this pair. However, on a DAILY CLOSE above the 1.26 level – I will aim for a move to the 1.2750 level, with a stop loss order at 1.2490 level.
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