- The British Pound has been all over the place against the US dollar as we continue to see a lot of noisy behavior.
- With that being said, we are sitting right on the 1.2750 level, an area that should offer a lot of support.
- We also have the 200 day EMA sitting there as well.
The resulting candlestick does look a lot like an inverted hammer, and this is an ugly sign for the British pound. During the day, Donald Trump announced that the tariffs would be paused for 90 days, at least the reciprocal tariffs, except for China. So, we've seen a rush back into the US dollar as a result. if the wait and see on this points out, but we had been selling off a bit anyway. So, I do think that the first crack in the ice, as far as Europe is concerned, might end up being the British pound. Well, at the wait and see, but if we were to break down below the 1.27 level, I think this is a market that drops precipitously again.
Headlines Continue to Be an Issue
The biggest problem you have is that the latest headline is what will drive massive amounts of money in and out of the market. So we're not at normal time and you have to keep your position size reasonable as a result. After all, you could end up seeing a 70 pip move in a matter of seconds with the right headline.
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That move could be in either direction. So, you have to keep that in mind as well. In general, I do think that this is a pair that drops, but I need to see a fresh new low to actually start shorting if we rally, then I would anticipate that the British pound probably sees a lot of resistance near the 1.29 level.
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