British Pound Slams Into Resistance

This pound has rallied rather significantly during the course of the trading week to slam into the 1.37 level. This is an area where I would anticipate a lot of noise based upon all of that choppy behavior in this general vicinity, so it is not a huge surprise to see how this has played out. Ultimately, it is also worth noting that perhaps there is more of a “risk off attitude” out there, so I do not know whether or not we can continue this move to the upside. Keep in mind that the Thursday candlestick was a shooting star, while the Friday candlestick seems to be mirroring that behavior.

GBP/USD Video 17.01.22

When I look at this chart, I recognize that we have seen a strong rally, and it is not a huge surprise to think that there could be a desire to buy this market, but at this point I think we need to clear the weekly candlestick to the upside, as we have so much in the way of noise at the moment, and especially fear. With this being the case, I do think that it is probably a situation where we need to be cautious, but I think a pullback makes the most sense. The 1.35 level would obviously be an area that probably causes a bit of attention. With that being said, it will be interesting to see if we can hold that area. If we cannot, then this market almost certainly will fall apart at that point.

For a look at all of today’s economic events, check out our economic calendar.