- The first thing I see is that the 50-Day EMA has been a bit of a barrier that the market is struggling to get above.
- If we can get above that level, it would obviously change a lot, but right now it looks to me like a situation where traders are just simply trying to sort out whether or not we have formed some kind of bottom.
This is not a surprise, because quite frankly traders have been shellshocked over the recent moves that we have seen around the world as the carry trade wound down. This had people running toward safety assets, and of course we also have the situation with the Bank of England and whether or not it is going to start loosening monetary policy further. With that being said, the market is likely to continue to see a lot of volatility, but I also think that it makes a certain amount of technical sense that we are hanging around in this area.
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Technical Analysis
We are currently sitting just below the 50-Day EMA, an indicator that a lot of people pay close attention to. Underneath, we have the 200-Day EMA near the 1.2665 level, which is even more important. Because of this, we are hanging around in that region between the 2 moving averages, something that typically causes a lot of noise. In general, I think that the GBP/USD Amarket will continue to see a lot of volatility and uncertainty, and with that being said, the market will continue to be a situation where there is a lot of volatility and concerned, but if we were to break down below the 200-Day EMA, the market is likely to drop toward 1.25 level. The 1.25 level of course is a large, round, psychologically significant figure, which of course also could cause a certain amount of volatility in noise in the market, and I think a lot of people will be paying close attention to it if we get anywhere near there.
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