The British pound broke down during the early part of the trading session on Thursday, slicing through the bottom of the shooting star during the day on Wednesday, and that suggests that we could go lower. However, we have had a little bit of a bounce back during the trading session and that shows just how resilient the British pound is trying to be. Keep in mind that this pair is sensitive to the risk appetite of traders around the world, as the Japanese yen is considered to be a “safety currency.” Furthermore, the British pound of course has to deal with the Brexit situation and all of the noise involving the coronavirus numbers in the United Kingdom.
GBP/USD Video 22.05.20
If we were to turn around a break above the highs from both the Tuesday and Wednesday session, then the market is likely to go looking towards the 50 day EMA, which is painted in red on the chart. Break above that level of course would be a very bullish sign but right now it looks as if the British pound is trying to break down lower, as we have had a sudden shot to the downside, a significant bounce, and now we are trying to figure out what to do with the pound itself right now. We are pressing the previous support level from the previous consolidation area, and that of course suggests that there should be significant resistance as we have seen of the last several days. I like the idea of fading rallies at this point, and of course aiming for the lows that we have recently seen near the 1.21 handle.
This article was originally posted on FX Empire
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