- The GBP/USD pulled back ever so slightly during the trading session on Friday, but then turned right back around to test the 1.24 level.
- There is a lot of noise between here and the 1.25 level, so I think you have to think about the idea that perhaps the market is trying to build up enough momentum to finally take off.
- If we can get above the lovely 25 levels, I think that would show that the market is ready to go look into the 1.20750 level, perhaps even the 1.30 level.
The 50-Day EMA is reaching just above the 1.20 level and trying to get to the 200-Day EMA. If the 50-Day EMA were to break above the 200-Day EMA, then it forms the so-called “golden cross.” That of course is a longer-term bullish sign, and that could send this market much higher. Ultimately, this is a situation that shows we are on the precipice of a bigger move. On the other hand, if we were to break down below the bottom of the candlestick for the session on Friday, it’s possible that we could go back to the 200-Day EMA to try and test support. The question now is whether we are going to form a double top, or if this is a continuation of what we had seen previously.
Looking for Opportunities to Pick Up Cheap Dollars
We are most certainly on the precipice of something bigger, and of course, a lot of people are going to be paying attention to the bond markets, and of course what they say about what the Federal Reserve does next. People are currently looking at the possibility of what the feds going to do next in order to send markets in one direction or the other. It should also be noted that the United Kingdom still has a very high reading when it comes to inflation, and that of course suggests that the currency could go much higher.
On the other hand, if we see a lot of negative behavior and finally break down below the 1.20 level, then it’s possible that we could go down to the 1.15 level, maybe even lower than that. We have been in a major downtrend for a while, at least until the last couple of months. The question now is whether or not we are ready to turn around or if this is just another opportunity to pick up cheap dollars.
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