- The British pound has pulled back just a bit in the early hours here on Friday, but it still looks as if the buyers are willing to come in and pick up each dip, to perhaps eventually send the British pound above the crucial 1.36 level above.
- That is a major resistance barrier that I think will continue to be watched very closely, and if we can break above that level, it could open up a rush of new buying.
- However, we have seen a lot of selling pressure at that area, and it does make a certain amount of sense that traders will need some type of new information to make a breakout happen.
Technical Analysis
The technical analysis for this market is relatively flat at the moment, but the longer term charts certainly look bullish. The question is whether or not we can continue to send the market higher, or do we sputter at this level yet again? If we do pull back from here, the 50 Day EMA sits at the 1.3472 level, and is rising. If we were to break down below that level, then the market could go looking at the 1.34 handle underneath, which has been significantly support multiple times. Anything below that level could have this market really start to sell off to reach toward the 200 Day EMA.
Keep in mind that the British pound fared better against the US dollar than most other currencies over the previous year or so, and therefore I would anticipate that if we start to see the US dollar really sell off, then I think you get a situation where the British pound probably becomes a big winner by default. On the other hand, if we see the US dollar start to strengthen, while the British pound could suffer at the hands of the greenback, it’s very likely that it will suffer less than many of the other major currencies.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
