- The GBP/USD has gone back and forth during the trading session on Friday, as we continue to hang around the 1.22 level, as we are simply waiting for some type of clarity in the short term.
- Ultimately, this is a market that has been positive over the last week or so, but it’s also been very choppy. The candlestick shows neutrality, and at this point, we are also paying close attention to the 200-Day EMA underneath.
- If we were to break down below the 200-Day EMA, then it’s likely that we could go to the 1.20 level, which is not only a large, round, psychologically significant figure, but also an area where we now find a 50-Day EMA.
Breaking down below the 50-Day EMA would be a very negative turn of events, and it could open up the market for an even deeper crash. Because of this, it’s possible that the market will see momentum pick up on that breakdown. On the other hand, if we were to turn around a break above the high of the candlestick on Friday, then it suggests that we could go looking to the 1.2450 level. The 1.25 level above there is a barrier that we need to fight to get above, and it may take a while to make that happen. If it does, then it’s likely that we will see a lot of weakness in the US dollar in general.
Noise Ahead
I think we are on the precipice of a bigger move, but we will have to wait and see what happens next. A little bit of patience probably goes a long way, and it’s very likely that we will see this market make its intentions clear in the next week or so. The market will continue to be noisy, but quite frankly that’s something that you will have to learn to expect in the currency markets now since we have seen so much in the way of questioning the Federal Reserve, and growth around the world.
After all, traders have learned to wait for Uncle Jerome to give them liquidity so that they can start selling dollars. The question now is whether he’s going to, as the Federal Reserve is likely to fight the temptation of liquefying the markets again.
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