The British pound ran into the 50-day EMA during the trading session on Wednesday, which is an indicator that a lot of people will pay attention to. It is also worth noting that the 1.38 level has offered resistance. That combination could be enough of a reason for the market to pull back, and the British pound has been a little lackluster as of late. While we did look like we were going to take off to the upside, the market could go towards the 1.39 handle, possibly even the 1.40 level. The 1.40 level is a large, round, psychologically significant figure that offers a lot of resistance, so that could be your target. However, it is going to take quite a bit of effort to make that happen.
On the other hand, if we break down below the 1.37 level, then we could go down towards the 1.3650 level. If we break down below there, then the market is likely to go looking towards the 1.35 handle, which is massive support. This is a significant level, and if we were to break down below the 1.35 handle, that could change the entire trend. Not only is it a large, round, psychologically significant figure, but it is also where the 200-day EMA is starting to race towards.
The candlestick is bullish, but we also have given back quite a bit of the gains towards the end of the day, so that shows me that there is a little lack of faith when it comes to this pair. Nonetheless, this is a market that is choppy, so I think you are going to have to keep that in mind. If the market continues this behavior, then it is likely that the market will eventually move towards one of the levels that I have just mentioned. Keep in mind that the US dollar itself is probably the biggest driver, as it continues to be heavily driven by yields in America and the idea of all of the stimulus that seems to be coming down the road. Both of these countries have turned the corner when it comes to vaccinations, so that is part of what may be making this market so difficult as of late.
