The British pound initially rally during the trading session on Tuesday but gave back the gains to show signs of exhaustion. Looking at this chart, you can see that the 50 day EMA has been a bit of a magnet for price over the last couple of weeks. This is a market that is being thrown around by expectations when it comes to the Federal Reserve and interest-rate expectations. Ultimately, this is a market that looks at the 1.39 level above as significant resistance, as we have seen during the last couple of weeks.
GBP/USD Video 15.09.21
If we turn around and break down below the 50 day EMA, then it is likely we go back towards the 1.38 level and then possibly down to the 1.37 level. The 1.37 level also has the 200 day EMA sitting just above, as it should offer plenty of support. If we break down below that level it is likely that we go looking towards the double bottom underneath at the 1.36 level. The 1.36 level underneath would be ultimately significant support, so breaking that would of course be a major negative event.
In the overall attitude that the market has right now I think continues to chop back and forth and show signs of confusion. The US dollar continues to be very noisy overall as expectations of inflation are all over the place. This market will continue to be noisy overall, so this is exactly what you can expect. The market looks as if it is trying to figure out whether or not we are going to go back and forth or form a larger “W pattern” overall.
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