Pound Sitting Just Above Support

If your short-term range-bound trader, this could be a good market for you.

The British pound has gone back and forth during the trading session on Thursday as we continue to test the support level underneath, in the form of the 1.30 handle. The market continues to be very noisy, but at this point, the question is whether or not we are trying to form some type of “double bottom”, or if we are ready to break down below the 1.30 handle.

On the downside, if we were to break down below the 1.30 handle, then we may grind towards the 1.28 level underneath there. There is a lot of noise in that 200 PIP range, so therefore it is likely to see a lot of downward pressure. Ultimately, this is a market that will have to make serious decisions rather soon, and as the Federal Reserve is very hawkish, that has been a bit of an anchor around the neck of the British pound itself. This is not necessarily an indictment on the pound, but more or less a sign of just how strong the US dollar is.

On the upside, the 1.32 handle is an area where we have seen a certain amount of resistance, and now that the 50 Day EMA is racing towards that level, it should offer a bit of a short-term ceiling.

All things being equal, we could just go sideways and try to carve out a 200 PIP trading range, and as we head into the weekend it is a bit difficult to think that somebody is going to jump out there and go “all in” for one currency or the other. The market is very noisy, but this is a major inflection point and therefore we need to see some type of impulsive candlestick in one direction or another to define a trend. The market has formed a couple of neutral candlesticks in a row, so that tells you just how confused we are, but it is also interesting to see the volatility has completely fallen off of a cliff. Now that is simply a matter of waiting to see when we get an explosive candlestick to follow. Between now and then, if your short-term range-bound trader, this could be a good market for you, but right now I am on the sidelines and waiting for clarity.


Leave a Reply

Your email address will not be published. Required fields are marked *

Risk warning: Trading in Contracts for Difference (‘CFDs’) carries a high level of risk and can result in the loss of all your investment. As such, CFDs may not be appropriate for all investors. You should not invest money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with CFD trading, and seek advice from an independent and suitably licensed financial advisor. Under no circumstances shall we have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. For more information about the risks associated with trading CFDs please find and read our ‘Product Disclosure’.

Please recognize that this website is the only official website, please do not enter other clone websites through Internet search or advertisements.

© 2011 - 2023 SlaTrade.com. All Rights Reserved.