- Looking at the British Pound, you can see that the market has initially tried to rally during the trading session on Thursday but gave back the gains rather quickly.
- Ultimately, I think this is a situation where you have to be very cautious, but I think what we've got is a scenario where we are doing everything, we can to carve out some type of range.
- That does make a certain amount of sense, after all.
The GBP/USD market has seen the 1.2750 level offer a lot of noise and resistance above. I think that is a very difficult range top to break and I think that the ceiling will continue to be a major factor. Underneath we have the 50-day EMA which of course is a major indicator as well and with that being the case it's a market that is starting to squeeze. Like any other market, if we see some type of release of pressure, it could be rather massive and violent. Because of this, I believe in watching this market more than anything else right now.
Longer Term in this Pair
When you look at the longer term charts, you can see that we pulled back to the 61.8% Fibonacci retracement level from the longer term move, so that has also caused some noise. Interest rate expectations coming out of the Federal Reserve is for several cuts this year, but now people are starting to question whether or not central banks around the world are going to start cutting, and that of course would include the Bank of England.
As a general rule, I don't necessarily have a strong inclination one way or the other in this pair, at least as long as we are between the 1.2750 level above and the 50 day EMA underneath. Once we break out of that range, then I think you could probably start to argue for a bigger move and perhaps even follow it. However, I am a bit hesitant to put any real money to this market at the moment, but once we break out of this range, I will start to build up a position perhaps trying to aim towards the 1.3150 level if we break higher or trying to aim for the 1.25 level underneath if we break lower.
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