- During Friday's trading session, the British pound demonstrated a rally, breaking above the 1.2550 level, which had previously acted as resistance.
- However, the question now arises as to whether the pound can sustain these gains.
- The immediate vicinity is marked by noise, and the upcoming Federal Reserve meeting is expected to introduce further volatility into the market.
Top Regulated Brokers
Recent days have seen a rebound from the 50-Day Exponential Moving Average (EMA), indicating a potential threat to the recent highs. The previous high around 1.2675, could be the next target. A successful breakout above this level would be a bullish sign and could potentially open the door for further gains toward the 1.2750 level. Conversely, if the pound were to break below the candlestick’s low, a retest of the 50-Day EMA could be in store. Below that lies the 1.2350 level, which has previously provided support. A breakdown below this level could expose the market to the 200-Day EMA. However, breaking through this support zone would likely prove challenging, considering its historical significance and the presence of the two major moving averages.
Keep Your Position Small
The outlook for a breakout or consolidation remains uncertain, with the upcoming Federal Reserve meeting expected to spark a strong market reaction. The Bank of England and the Federal Reserve have maintained a tight monetary policy stance, and the potential for choppy trading persists until the market finds a resolution. While the chart appears bullish, the noise above makes it difficult to adopt an aggressive trading strategy. Shorting the pound would be extremely challenging until a breakdown below the 200-Day EMA materializes. If it does, we could see a significant drop in value for the Pound.
At the end of the day, the British pound displayed a rally, surpassing the 1.2550 level. However, maintaining these gains remains to be determined, with noise and the forthcoming Federal Reserve meeting impacting market dynamics. The rebound from the 50-Day EMA suggests a potential test of recent highs, but a breakout is required for sustained bullish momentum. Support levels at 1.2350 and the 200-Day EMA will likely present obstacles if the pound weakens. Traders should exercise caution, monitor central bank actions closely, and be prepared for choppy trading conditions until a clear direction emerges. Positions should be kept somewhat small until these conditions are known.
Ready to trade our daily Forex forecast? Here’s a list of some of the top forex brokers UK to check out.