- The GBP/USD pair has stood out a bit, as it looks like we are rapidly approaching a confluence of potential support based on technical analysis and market history.
- That being said, there are plenty of things going on at the same time that could continue to cause a bit of volatility.
Technical Analysis
Looking at the technical analysis of the GBP/USD pair, we are currently hanging around the 50 Day EMA, which of course is an indicator that a lot of people look to for directionality when it comes to the trend. Furthermore, the Bollinger Band indicator also has the lower part of the indicator near the 1.30 level. The 1.30 level of course is a large, round, psychologically significant figure, and therefore I think a lot of people will be paying attention to it.
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Taking all of this into account, it’s likely that the market dropping from here could end up finding some type of support near the 1.30 level if we do continue to drop. That being said, market participants will continue to look at this through the prism of perhaps trying to take advantage of any type of bounce, but I also recognize that the market is likely to see that the drop in value of the British pound could offer a bit of value the people are willing to take advantage of. As long as we can stay above the 1.30 level, I think we will have a situation where the market still remains very bullish.
At this point in time, I have no interest in trying to short this market, but if we were to break down below the 1.30 level on a daily close, I think that could change a lot of things. Until then, I suspect that this is still a short-term pullback that a lot of people will be looking at as a potential buying opportunity, so I certainly don’t want to try to “front running the selling pressure” that could be coming, only to see that it doesn’t show up.
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