The Bank of England stepped into the marketplace and started a bond buying program during the trading session on Wednesday in a bid to drive yield down. Ironically, that’s rather negative for the GBP/USD overall, but the fact that the Bank of England is at least going to step in and do something probably causes for a little bit of relief.
We are still very much in a downtrend, and I think that any bounce that we get here is to be looked at as suspicious, therefore I will be more than willing to fade signs of exhaustion after a move to the upside. The 1.15 level above I think is the “ceiling in the market”, but you should also pay close attention to the fact that the 50-Day EMA is in that same area. Regardless, this is a market that will eventually run out of momentum, as the US dollar has been like a wrecking ball, but it is overbought. Ultimately, this is a situation where we would see any bounce attract the attention of those who are longer-term thinkers, and therefore I think that this probably could be a nice opportunity.
Markets Are Trying to Take Profits
- The candlestick for the trading session on Wednesday looks as if it is going to form a hammer, which is the same thing that it formed on Monday.
- At this point, I’m just simply going to step to the side and look for an opportunity to get short yet again.
- The 1.05 level underneath could be a significant support level, and an area that will attract a lot of attention.
- Once we break down below the 1.05 level, it will open a move down to the parity level. We have seen this movie before, but in the EUR/USD pair.
We bounced a bit from the major level underneath, grind it a little higher, and then fall again. I think that’s going to be the case yet again. Yes, there’s a little bit of a relief move during the day on Wednesday, but now when you look at the longer-term trend, it’s nothing but a small blip on the radar. This is a situation where market participants are simply taking profit as they trying to reassess the situation in the United Kingdom.
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