Potential signal:
- I’d be a buyer of this pair on a daily close above the 1.30 level.
- I would have a stop at the 1.29 level, and aim for 1.32 or so.
The British pound has slightly during the trading session on Friday, as we continue to see a lot of noise just below the 1.30 level. This is an area that I think will continue to be important, but if we can stay underneath the 1.30 level, it's possible that we might see a bit more negativity coming into this market.
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That being said, I think that the market would need to break down below the 1.2880 level to consider shorting it. And even then, I think you need to be very cautious. For what it is worth, quite a few of the US dollar denominated currency pairs right now are showing signs of weakness in the weekly charts. And this one is no different. There's actually a bit of a shooting star forming. On the other hand,
On a Rally
If we were to rally and break above the 1.30 level, it's likely that the British pound will continue to go much higher, perhaps trying to reach the 1.35 level before it's all said and done. The 61.8 % Fibonacci retracement level is right here as well. And that of course has a certain amount of interest in the market from technical traders. The 50-day EMA looks as if it is trying to rally from here, and break above the 200 day EMA kicking off the so-called golden cross.
So, I think we've got a lot of cross currents right now that we are trying to sift through when it comes to the technical analysis. But one thing is for sure, the US dollar is a little oversold at the moment. So, the pullback, I think, at least even if it's only temporary, makes a certain amount of sense. That being said, I would be careful trying to get too short of this market, as the British pound has been stronger than a lot of other currencies over the last year.
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