The British pound bounced a bit during the trading session on Thursday, reaching towards the 50 EMA. I believe that the hourly chart looks as if it is ready to start selling off again, and I think that the 1.40 level above is a significant resistance barrier. If we can break above the 1.40 level, then I would be convinced to start putting money to work. Otherwise, I think we have some grinding to do, perhaps trying to build up enough momentum. I recognize that the US dollar will react mainly to what’s going on in the US treasury markets, so it’ll be interesting to see how that plays out. Beyond that, we have the British pound which of course is heavily influenced by the headlines coming out of the negotiations between London and Brussels.
I believe that the market will course continue to be very noisy, but in the longer-term I do favor a move to the upside, it just comes down to how long we will have to wait for the buying opportunity. I would also use small positions initially, and then add as we go higher. The 1.43 level above will be resistance as it has been in the past, but I think once we break above there we will then make a significant attempt to break towards the 1.45 handle.
If we did breakdown below the 1.3650 handle, that would send the market down to the 1.35 level, and perhaps even break down the overall move higher that we have seen. Because of this, I think you need to pay attention to those levels and then become very aggressive to the short side if that happens. It has to be said that shorting the dollar has gotten a bit crowded.
GBP/USD Video 23.02.18
This article was originally posted on FX Empire
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