- The GBP/USD saw a slight dip during the recent trading session, following a massive shot higher.
- The market is sitting near the 1.2150 level, an area where there has been a lot of resistance previously.
- The move to this area has been overdone, so a pullback would make sense. The 200-Day EMA sits just below, which adds to the interest.
As the bailout of Silicon Valley Bank occurred, traders started banking on the idea that the Federal Reserve would come out and start loosening monetary policy sooner than expected. However, they are not taking the inflation numbers into account. The CPI could give a "heads up" as to where things are going next, so traders should pay close attention to it.
If the market rallies from here, it could go to the top of the previous push higher, meaning that the 1.23 level would be the ceiling. Anything above that would start to threaten the double top formed at the 1.24 level. However, the market has a lot of negativity and resistance above, and it is likely only a matter of time before we see some type of exhaustion candle that traders can start feeding on.
Negativity and Resistance Ahead
Underneath, the 1.20 level is a large, round, psychologically significant figure that many traders will be paying attention to. However, it will likely be broken through, as the market has already sliced through it a couple of times. In that scenario, the market will almost certainly go down to the 1.1850 level, where it bounced from a few days back. Anything below there opens the possibility of going down to the 1.15 level, another large, round, psychologically significant figure, especially as we have seen a lot of resistance in that area in the past.
Overall, the British pound has experienced a lot of volatility recently, and there are both resistance and support levels that could impact its performance. Traders should pay attention to inflation numbers and be prepared for sudden market shifts. The market has a lot of negativity and resistance above, and it is important for traders to be cautious and consider all factors before making any decisions. Furthermore, it’s going to be paramount that you keep your position size reasonable since we have seen so much volatility in the Forex markets. I do not expect that to change anytime soon.
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