- In my daily analysis of the GBP/USD currency pair, the first thing that comes to mind is that the British pound has taken it on the chin.
- At this point, it looks like we have seen a lot of resistance near the 1.2750 level. If we can break above there, it would obviously change things but right now it looks like it’s a massive brick wall.
- Because of this, I’ll be paying close attention to the 1.2750 level for any significant change.
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Consolidation
The consolidation has been somewhat obvious between the 1.25 level on the bottom, and the 1.2750 level on the top. The size of the candlestick on Monday is rather ugly, and that does suggest that a lot of people will be running to the US dollar again. Quite frankly, the downtrend has been formally ensconced, so at this point in time I don’t see any reason to think that the trend will change easily. However, like I said, if we were to break above the 1.2750 level, then I would have to reconsider some things.
If we were to break down below the 1.25 level, then it opens up the possibility of a significant drop down to the 1.23 level. Interest rates continue to be an issue for the United States, despite the fact that a lot of market participants believe that the Federal Reserve is going to be cutting interest rates by 25 basis points during the month of December. Because of this, the market is likely to be very noisy, but I do think that eventually we will have to come to some type of conclusion. The conclusion could be in either direction, but as I think we have seen recently, it’s very difficult for this market to break out to the upside. Because of this, the market is likely to continue to see a lot of volatility, but sooner or later, we could see a rather large move.
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