- The British pound has initially tried to rally during the trading session on Monday, but as you can see, the 1.26 level has offered a significant amount of resistance. And then we turned around and fell hard.
- The 1.25 level is an area that continues to see a lot of support.
- It's a large round, psychologically significant figure, and an area that's been important times.
The question now is what happens next because we are at a major inflection point. If the market were to break down below the 1.25 level, then you could see a drop to the 1.23 level pretty quickly. The US dollar is by far the strongest currency of the majors around the world and with interest rates in America being so high it makes quite a bit of sense. With this I think you've got a situation where you continue to look at rallies as selling opportunities. Now, having said that, the British pound is faring better against the US dollar than many other currencies.
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British Pound Decent Overall, but not Here.
So, you can also take this and use this as part of your analysis to perhaps buy the British pound against the Australian dollar, which is doing so much worse. It isn't necessarily that the British pound is going to go flying. It's just that it's doing better than these other currencies. As far as against the US dollar is concerned, the 1.2750 level above will continue to be a significant barrier. It's not until we break above there that I think the market really has a significant chance to take off to the upside. And it's probably worth noting that the 1.2750 level is also backed up by the 50-day EMA as well as the 200-day EMA. I remain a fade the rallies trader in this market.
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