- The British Pound shows hesitation near the former support at 1.32, with traders watching potential bearish signals from the EMAs.
- A rollover could target 1.30 and possibly 1.2750, while any bullish shift would require a strong move above 1.33.
The British Pound has gone back and forth during the trading session after initially gapping lower on Monday. It appears that the 1.32 level continues to offer a little bit of a barrier, and that of course, is interesting considering that the 1.32 level had previously been support, so therefore there's a lot of market memory attached to the British Pound in this general vicinity. By failing there, it does suggest that perhaps we don't really have the necessary momentum to break out.
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And it is worth noting at this point that traders will be looking at the 50 day EMA breaking lower, possibly crossing below the 200 day EMA to show the so-called death cross. That death cross is a longer-term sell signal and could open up longer-term traders to get short here.
A Potential Target
If the market rolls over here, then I would anticipate the 1.30 level as being an area of interest, as it's a large, round, psychologically significant figure and the most recent swing low. Notice that we did not make a new swing high, and that is not overly surprising because, quite frankly, the British pound has fallen against the US dollar almost constantly since the FOMC meeting in September. It's the same as we're seeing in other currencies.
Once Jerome Powell gave that press conference, the US dollar has, for the most part, just rallied against everything. So, with that being said, I'm watching for an opportunity to start shorting this pair and then looking at the 1.30 level because if we break that level, the British Pound goes to the 1.2750 level in my estimation by the time we're all said and done. If we can rally above the 50-day EMA at the 1.33 level, then things could change, but it would take a pretty strong move or perhaps some type of fundamental reason for the British Pound to suddenly skyrocket.
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