- The British pound initially fell during the trading session on Thursday, only to turn around and show signs of life yet again.
- All things being equal, this is a market that continues to see buyers every time it falls, as we have seen multiple days in a row.
- Because of this, it’s as if the market is trying to tell you something, and as a trader it is your job to know what that is.
Given enough time, I think the GBP/NZD market that will try to break above the 50-Day EMA above, which is near the 2.0875 level. If we were to break above that level, then it’s likely that the British pound could go looking to the 2.12 level above, an area that has been very resistive in the past. We have been very volatile, and I think that will continue to be the case going forward, as the market is without a doubt we are trying to find our footing and turn things around. Keep in mind this is a relatively thinly traded pair at times, so therefore you need to be cautious with your position size, but I do think that eventually we take off to the upside as the British pound has been so strong.
Plenty of noise
I think noise will continue to be a factor and a feature in this market, not a bug. Because of this, you need to be cautious with your position sizing but I do think that once we break above the 2.09 level, then it’s probably time to get a little bit more aggressive to the upside. On the downside, if we were to break down below the 200-Day EMA, that would obviously be a very negative turn of events, but I don’t see that happening very easily. With this, the market is likely to continue to see a lot of support underneath, and there will be a big fight anytime we get near that area. Because of this, I still prefer the “buy on the dips” strategy, but if we were to give up the 200-Day EMA, this market could fall apart rather rapidly.
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