The British pound has broken higher during the course of the trading session on Thursday to break above the significant 50 day EMA. Perhaps more importantly, we have clear the 1.38 level and broke above the top of a couple of shooting star like candlesticks. In other words, we have plowed through resistance, and it looks like the British pound is ready to go much higher.
Looking at this candlestick, you can also see that we have closed at the very top of the range, that typically suggests that the market is likely to continue going higher. On the other hand, any short-term pullback is probably going to be bought into, and the bottom of the range will support the market as well. After that, we have a couple of neutral candlesticks and of course the 200 day EMA underneath there at the 1.37 level. That is an area that I think will also come into play, so pay close attention to that as well. In general, this is a market that I think continues to find buyers underneath in order to try to pick up momentum.
Looking at this chart, it is obviously a market that is trying to pick up momentum, and therefore I think you should pay close attention to any breakout above the 1.39 level. Clearing that level is the next barrier, and of course would have a lot of people looking to find some type of opportunity to get long. The 1.40 handle after that would be the most likely of targets, as it is an area that we have seen a lot of action at previously. This would obviously be an area that would be difficult to get beyond, but if we did this market would take off rather drastically. I do not see that happening, but I certainly see more bullish pressure in the short term. Keep in mind that the jobs number will make this pair fly back and forth, and therefore it is likely that we will see a lot of noisy behavior. Nonetheless, this is a market that will find a little bit more in the way of stability. That being said though, if things change rapidly, it could be the beginning of something rather drastic. Until then, I would anticipate little in the way of stability.
