British pound traders were all over the place during the trading session on Friday as the jobs number came out and word got out that Donald Trump has contracted the coronavirus. That being said, the risk was all over the place during the day and it showed up in this chart. Furthermore, you have to keep in mind that the Brexit nonsense is still out there waiting to happen, meaning that we will get the occasional noisy headlines. Because of this, the British pound is going to continue being very difficult to trade.
Looking at the chart, it is apparent that the 1.30 level has offered significant resistance, and at this point, it probably will continue to do so. The candlesticks over the last couple of days have been somewhat supportive, but we are still essentially in a down-trending channel, which suggests that we still have a lot of trouble just above.
Looking at the 50 day EMA, it is slicing through the candlestick, so that is something to pay attention to as well. I believe at this point we will continue to see a lot of noisy trading, and therefore I like the idea of selling on short-term charts, but as far as buying is concerned I would like to see a daily close above the 1.3050 level as it would clear quite a bit of noise. At that point, somebody would have to have said something about Brexit, which can throw the spear around quite rapidly. In fact, we have seen that earlier this week, only to have cold water thrown on it as rumors continue to rule the day. Nonetheless, until we are above that previously mentioned level of 1.3050, I look at any rally with a bit of a grain of salt.
To the downside I believe that the 1.2750 level will continue to offer support, just as the 200 day EMA sitting right there will as well. Breaking down below there opens up another 50 pips to the downside, and ultimately a move down to the 1.25 handle. I expect to see a lot of choppiness between now and whatever resolution we get to this area, so keep that in mind when putting your positions on what we are more than likely going to continue to see.
