British Pound vs US Dollar Technical Analysis
The British pound has gone back and forth during the trading session on Thursday as we continue to dance around the 1.2350 level. The 1.2350 level has been supported a couple of times in the past, and therefore the market reacting to this level is not a huge surprise. The market is trading between the 50-Day EMA above and the 200-Day EMA underneath. This typically is an area that will be very choppy on a chart, because the market is trying to determine whether or not it is going to stick with what has been an uptrend, or if we are going to turn around.
There are certainly enough reasons out there to be concerned about the uptrend, not the least of which would be the fact that there are a lot of economic concerns around the world. While it is not necessarily the United Kingdom that traders are concerned about, the reality is that a lot of traders will run toward the US dollar in times of economic uncertainty, and therefore it has a bit of a “knock on effect” in this currency pair. If we were to break down below the 200-Day EMA, then we could make a move down to the 1.1850 level. The 1.1850 level has been a major swing low, so breaking that could open up the floodgates to the downside.
On the other hand, if we turn around and break above the highs from the Wednesday session, we could make a move toward the 1.2750 level, which is an area that has been resistance in the past. The market should continue to be noisy to say the least, but if we were to reach toward that area you would have to start to question whether or not the British pound could finally make it to the 1.30 level. Looking at this chart, it’s easy to see that we are at an area of potential inflection point, and that typically means that you are going to see some type of volatility, right along with the possibility of some type of impulsive candlestick that could get the market moving rather quickly.
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