The British pound rallied a bit during the trading session on Thursday as we have pierced the 1.2250 level, an area that was the top of resistance. The next resistance barrier above is the 50 day EMA which is painted in red. At this point, the market is very likely to respect that moving average as we have seen more than once over the last several months. Ultimately, I think that the market will find that area resistive enough to start selling off, assuming we even get there. Ultimately, the market participants are starting to run into a bit of noise at the 1.2250 level, so even if we can overcome it we will have spent a lot of energy to get higher.
GBP/USD Video 23.08.19
When you look at the chart, you can see that we have made a bit of a bottoming pattern but I think at this point it’s very likely that we are going to eventually exhaust ourselves, and as the bond markets have been attracting a lot of trading capital as of late, eventually the US dollar picks up. Quite frankly, the Brexit has not been fixed so any rally like this should be thought of as potential buying opportunity for the US dollar, and now it’s just a matter of waiting for signs of exhaustion to take advantage of. In fact, it’s not until we break above the 1.25 level that I would be convinced of any turnaround. This could be a nice opportunity presenting itself over the next couple of days.
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This article was originally posted on FX Empire
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