- The GBP/USD currency pair has gone back and forth during the trading session on Wednesday as we are waiting for the FOMC statement.
- The 1.25 level sitting above continues to offer a lot of resistance, and therefore that you need to pay close attention to that level as a potential gateway to a much higher pricing.
- That being said, we have the statement coming out and that will obviously have a major influence on what happens with the US dollar going forward.
Is the GBP/USD Forming a Golden Cross?
Looking at the GBP/USD chart, the first thing I notice is that we have the 50-Day EMA breaking above the 200-Day EMA kicking off the “golden cross” that a lot of longer-term buy-and-hold traders like. However, I’ll be the first to tell you that this technical indicator can be wrong more often than not, and at the very least it tends to be late. However, there are certain traders out there that will pay close attention to it so you need to keep that in the back of your mind. Furthermore, I think of that as a potential target for any breakdown that we have initially, followed by the 1.20 region. The market has been very noisy in this area for a while, so I do think that we get a situation where a lot of traders we pay close attention to that level, because if we get rid of the 1.20 level, the market is very likely to drop down to the 1.15 handle.
In the meantime, if we can break above the 1.25 level, I think that would be a continuation of US dollar weakness across the Forex world, and you would have to pay serious attention to a move like that. My suspicion is that if we see the British pound break above there, it will probably be more or less a general US dollar weakness that we are witnessing. On the other hand, if we roll over from here that it would confirm a double top that sits just below that crucial figure. We have the job number on Friday, so I think that by the end of this week, we'll probably have a lot of answers to questions when it comes to the US dollar overall, and we could be getting ready for a much bigger move in one direction or the other.
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