- During the trading session on Wednesday, we have seen the British pound initially fallen against the US dollar but then turned around and show signs of strength.
- All things being equal, the market is continuing to fight with the 200 Day EMA, and I think it’ll be interesting to see how things play out in this region.
- After all, we not only have the 200 Day EMA and the picture, but we also have the 1.2750 level above, which is an area on the chart that has been important multiple times in the past.
Trend Changing?
We are in the midst of a potential trend change, but just breaking the 200 Day EMA is not quite enough to be fully convincing. I think we need to see this pair break above the 1.2750 level on a daily close to start thinking about a longer-term move to the upside. Furthermore, you also have to keep in mind that the United States is starting to show a little bit of stagnation, but the leading indicators are a bit of a mixed bag, suggesting that inflation could pick up in America again, and I think this gives us high likelihood of being whipsawed.
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If we turn around a break down below the 1.26 level, then I think you have a real shot at the US dollar strengthening and dropping the British pound down to the 1.25 level, an area that previously had been important, and also has the 50 Day EMA hanging about it. I think this is a market that certainly looks positive, but we also have the possibility of seeing a lot of noisy behavior, and therefore you need to be cautious with getting too big with any particular position, as the likelihood of being slammed around in the market is very high at the moment, and I think it’s probably only going to continue to be so, as tariffs are almost certainly going to be levied on somebody, somewhere.
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