- The British pound has initially tried to rally during the trading session here on Friday but continues to see a lot of resistance above the 50-day EMA.
- Ultimately, this is a market that I think, given enough time, we'll have to make a bigger decision. But really, at this point, we're in the middle of the larger consolidation area.
We are between the 50-day EMA and the 200-day EMA indicators. And that in and of itself is a fairly big deal. This is a situation where I think we are starting to see U S dollar strength around the world, and the market will continue to see this as a harbinger, at least where we're going with the greenback, I think.
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This is mainly due to the fact that the British pound has been more resilient than many other currencies against the greenback. So, if this one starts to sell off, then the other ones really don't have much of a chance. This would be especially true in the euro and the Canadian dollar, Japanese yen. So, with this, I like the idea of fading the short-term rallies as we have formed a couple of long weeks to the upside, but shorting the British pound, as opposed to like shorting the Euro, isn't quite as appealing for me, but I use this as a tertiary indicator.
If USD Starts Falling…
Conversely, if we see the US dollar falling apart against other currencies around the world, this is the one I expect to do better than many of the other ones. We are somewhat sideways at the moment. This is an area that has been important previously. If we give up 1.32, which we're not really close to doing at the moment, this pair falls apart pretty quickly. Ultimately, I am somewhat neutral on this pair, but if I had to place a position, it'd be short.
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