- The GBP/USD has rallied ever so slightly during the day on Thursday, but it looks as if we have nowhere to be.
- This makes a lot of sense considering that most be forward about New Year’s celebrations and not so much about Forex world.
- We are currently between the 50-Day EMA underneath and the 200-Day above, and it’s probably worth noting that we are also close to the 1.20 level, an area that I think a lot of people will pay close attention to because of the psychological and structural importance of it.
If we break down below the 50-Day EMA, it could lead to a significant breakdown, perhaps opening the possibility of the British pound going down to the 1.15 level underneath. On the other hand, if we can take out the 200-Day EMA we will probably get looking to the 1.2450 level above, where we then begin to attack the 1.25 level and try to break out from there. As things stand right now, I think we’ve got a situation where we are simply going back and forth killing time, trying to wait for the next fundamental announcement.
Lack of Liquidity Can Cause Violent Moves
The other thing of course that we will be waiting on is volume. There’s none out there so that explains why this pair has done almost nothing. If we can get some type of announcement in the short term, that probably sends this market in one direction but rather rapidly. Which could be very dangerous if you’re not careful. Keep in mind that this is a market that is not only trying to measure with the Federal Reserve is going, but what the Bank of England is doing as well.
The markets will probably see a lot of back-and-forth short-term movement, but in less you are looking to the scalp, there’s not much to do here until we get beyond the jobs number on Friday, perhaps even later than that. Keep in mind that most professional traders at work for big firms are looking to take holidays, not sit at the computer and punch buttons. This is the folly of the retail trader, a trap that I sincerely hope you don’t fall into. The lack of liquidity can cause violent moves all of a sudden, and it can cost you quite dearly if you are not careful.
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