- The British pound initially fell during the trading session on Friday, dipping well below the 1.90 level.
- However, we have turned back around to form a bit of a hammer, and it does suggest that we can bounce from here.
- If we do in fact rally from here, I think the market is likely to continue to go looking toward the 200-Day EMA above, which is closer to the 1.9120 region.
That being said, if we were to break down below the 1.89 level, it’s likely that the market could drop rather significantly. At that point, I would anticipate a move to the 1.87 level being very easily occurred. I don’t necessarily think that it’s going to be a scenario where it easily happens, but if we start to see a lot of money flow into Australia for some reason, that could help.
On the other hand, if we turn around and rally from here, I think it makes quite a bit sense that we go looking to the 200-Day EMA, possibly even the 50-Day EMA after that. A bounce from here it could have people looking at this through the prism of some type of recovery rally, and I do think that makes a certain amount of sense considering that the death of the British pound had been greatly exaggerated.
At a point of inflection
This is a market that seems to be at a point of inflection, and it does make a certain amount of sense that the 1.90 level will attract attention due to the fact that it is a large, round, psychologically significant figure. That being said, I also recognize that this is a market that will continue to be very noisy, which does make sense considering that it is a “cross pair”, and therefore a lot of people will continue to see it as a little bit difficult to handle at times. However, both major currencies, so I feel that I can be quite comfortable trading this market, but I also recognize that the average true range can be a little wild at times. At this point, I am leaning toward a bullish attitude.
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