- The British pound has rallied a bit during the early hours on Thursday as we are slamming into the crucial 1.2750 level.
- This is an area that's been both support and resistance multiple times in the past, and simultaneously we are seeing the 50-day EMA at least attempt to break down below the 200-day EMA, kicking off the so-called death cross.
- However, Friday features a non-farm payroll announcement and that could throw any move into disarray.
It does look like we are seeing a little bit of pushback as we have broken above 1.2750 only to drop back down towards it again. So, it'll be interesting to see how this plays out. I do think we are at a major inflection point right now. So, I am watching this pair with great interest.
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The US dollar itself has been very strong for some time and perhaps we're seeing a little bit of profit taking ahead of the jobs report, but what will matter to me is where we close on Friday. I think that will tell the tale for a lot of things. And in that environment, we could have a little bit of a binary trade, not a binary options trade, a binary trade, meaning we are either buyers or sellers based upon a specific event.
If we break significantly above the 1.2750 level after non-farm payroll and hang on to it, perhaps you could just say if we close above there on Friday, then it might end up being a fairly significant buying opportunity. However, if we see this GBP/USD pair fall apart, then it's very likely that we could go looking to the 1.25 level. I think Friday is pretty big for this one. In fact, this might be a situation where this controls what happens over the next several months, but we will have to wait and see if that ends up being the case.