- The GBP/USD initially fell during the trading session on Friday but found enough support above the major trend line that it looks like we are ready to try to turn things around.
- The question of course is how the markets are going to react to the Jackson Hole Symposium speeches, but right now it looks like those who are bullish on the British pound are not ready to give up.
- If that’s going to be the case, this could very well end up being a nice buying opportunity.
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If we were to break down below the 200-day EMA, then the bottom good fallout of this market. In that scenario, then I think we go to the 1.2350 level rather quickly, and then possibly down to the 1.20 level. I suspect that the market is going to continue to be very noisy regardless, as there are so many questions about what’s going on around the world. The Bank of England has recently seen some rather negative numbers to look at, but at the end of the day, inflation is still a problem and there’s nothing to suggest that the Bank of England is going to change its tune in the short term. In other words, they will probably be every bit as hawkish as the Federal Reserve.
Volatility Ahead
However, Jerome Powell could shake the markets up, so be advised that massive volatility could very well be the norm over the next couple of weeks. I think at this point, you need to look at this through the prism of trying to protect your account and keep small positions on. Furthermore, we are at the end of summer, so one must wonder how much volume there really is out there, so some of the moves might be a bit exaggerated.
On the upside, if we can break above the 50-day EMA, the market is likely to investigate the 1.2850 level. Anything after that opens out the possibility of a move to the 1.30 level, an area that has been important a couple of times in the past and of course has a certain amount of psychology attached to it. That means that we will more likely than not see a lot of fighting in that region, if we get there that is.
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