- The British pound has initially fallen during the trading session on Tuesday but then turned around to show signs of life as the market continues to pressure to the upside in general.
- All things being equal, it’s probably worth noting that we are stuck between the 50 Day EMA below, and the 200 Day EMA above.
- As we are sitting right in the middle of these 2 crucial moving averages, it is probably worth noting that this typically will lead to some type of volatility.
It’s worth thinking about the fact that the British pound has shot straight up in the air as of late, and while it has been a fairly impressive move, the reality is that we are still in a downtrend, if for no other reason than the fact that we are below the 200 Day EMA. Granted, it is only quite obvious by the time we break above there that the trend has changed, but it was such a massive plunge for the British pound that it will be interesting to see whether or not that is easily reversed.
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Technical Analysis
As mentioned previously, we are sitting between the 50 Day EMA and the 200 Day EMA moving averages, both of which are widely followed. The 1.25 level below is significant support, while the 1.2750 level above is a major ceiling. If we can break above the 1.2750 level, then it opens up the possibility of a bigger move, but ultimately, I think that we have a situation that will continue to be very noisy, as the Federal Reserve is likely to stay tight, while the Bank of England may have to continue to move. It will have to be a “wait and see” situation as far as interest rate differential is concerned, but most of what’s moving this market here I believe is the US dollar itself, and interest rates in America as traders are starting to come into focus yet again. Expect noise in this general vicinity overall.
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