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Christopher Lewis
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GBP/USD

The British pound has gone back and forth during the last couple of months, and now we are getting close towards the top of the risk range. If that is going to be the case, then it makes sense that we could see some sellers, especially as the 200 day EMA is starting to come into play. The 200 day EMA would make a lot of sense, as resistance because it is such a widely followed indicator. Beyond that, it also would be a sign where we would be testing the previous couple of highs, and that could send this market right back down.

GBP/USD Video 03.06.20

On the other hand, though, if we break above the 1.2650 level, the British pound will continue to go to the 1.30 level. The explosive nature this move has been a bit overdone, but we have seen recently that does not matter. With algorithms going wild, the markets are likely to see a lot of erratic moves in one direction or the other. I also have to ask whether or not there is a lot of volume, because these moves have been quite extraordinary. That being said, a pullback does make sense but and overextension is always possible as well.

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If the market pulls back from here it could go looking towards the 50 day EMA, perhaps even the 1.21 handle over the longer term. I think this will come into play if people start to wake up to the fact that the UK, although opening, has plenty of damage just waiting to happen. Remember Brexit?

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

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