- During my daily analysis of the GBP/USD pair, I’ve noticed that although we had a little bit of upward trajectory early in the session, we have seen the British pound give up its gains against the US dollar, which leads me to believe that we are going to continue to see a lot of back and forth and noisy behavior.
- Because of this, I think you’ve got a situation where the market is likely to continue going sideways more than anything else, as we have been stuck in a relatively well-defined trading range over the last several weeks.
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The Range
The range that I see at the moment in this market is defined by the 1.2500 level underneath, and the 1.2750 level above. While we did test the 1.2750 level at one point, we turned around to show signs of extreme resistance, and therefore I think it’s going to be very difficult for this pair to break out to the upside. On the downside, the 1.25 level has seen buyers during a couple of different sessions, so I think that will be rather stringent support as well.
The 50 Day EMA and the 200 Day EMA are getting ready to cross, kicking off the so-called “death cross” that a lot of traders will pay close attention to for a longer-term bearish signal. However, despite the fact that this is of course negative I have found that it typically is a very late signal in the Forex markets, so I only pay slight attention to it. However, I do recognize that it does put a bit of a “black cloud above” for the Forex traders to pay close attention to.
As we are in the middle of the range, I suspect that we probably go a bit sideways in the short-term, but we have Services PMI coming out of the United States on Wednesday, and then of course the Non-Farm Payroll announcement on Friday which will have a major influence on the US dollar. In the meantime, I think we just grind away.
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