- During my daily analysis of the trading markets on Thursday, the British pound has caught my attention as we are hanging around the 200 Day EMA, which is a large and psychologically important indicator that people will often use determine the overall trend.
- With that being said, it does attract a lot of attention, and a lot of people will be paying close attention to whether or not this area holds.
- The fact that it did hold suggests that the overall downtrend is still very intact, so I think this has a major influence on what happens next.
Technical Analysis
The technical analysis for this GBP/USD pair is obviously very important to pay attention to, because the 200 Day EMA is so important, it does suggest that perhaps we will continue to see selling pressure. However, if the market does break down from here then I think you’ve got the real possibility that the 50 Day EMA comes into the picture for potential support. It sits just above the crucial 1.25 level, which of course is a large, round, psychologically significant figure. The market breaking down below that level of course is a very negative turn of events.
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The US dollar strengthen against almost everything during the trading session on Thursday, so it’ll be interesting to see if that ends up being the case going forward. If we do in fact continue to see the US dollar strengthen, the British pound of course will be any different. Because of this, the market is likely to continue to see a lot of questions asked of the British pound, and therefore it’s not until we can break above the 1.2750 level that I would be convinced that we could go higher and perhaps take off to the upside for a bigger move. That’s an area that’s been important multiple times as well, so if we can get above there, we would not only be above a large level, but we would also be above the crucial 200 Day EMA as well, which obviously would be a very bullish sign.
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