- The British Pound has rallied a bit during the trading session early on Thursday as the Bank of England cut interest rates by 25 basis points.
- The biggest thing about that is although people have asked me why it strengthened, the reality is the Bank of England.
Although an important central bank isn't anywhere near as important as the Federal Reserve. Furthermore, the markets knew they were going to do that. Just like when the FOMC interest rate decision comes out a little later in the session, the Federal Reserve will cut 25 basis points. In other words, they wash each other out. The real thing that you need to pay attention to is going to be the press conference. As things stand right now, it looks like traders out there believe that we could make a move to the upside.
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What I Want to See
So really what I'm watching is whether or not we can break above the 50 day EMA on a solid and convincing daily close. In other words, I don't want to see the market close three ticks above the 50 day EMA or spike above it and give back a bunch of the gains.
I want to see a strong close at the end of the session, well above the 50 day EMA. At that point, I can become bullish. Until then, we are just simply bouncing around between the 50 day EMA and the 200 day EMA, and subsequently paying close attention to the 1.30 level, which of course is a large round psychologically significant figure. It's probably worth noting that the 200 day EMA is at the 1.2850 level, so that is even more solid support, if you will, in that region. If we were to break down below there on a solidly negative candlestick, then I think the US dollar really starts to swallow everything. All things being equal, as far as looking at it, I suspect we probably rally eventually. But right now, it looks like we've got some chopping around to do.
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