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Christopher Lewis

The British pound rallied initially during the trading session on Tuesday, reaching towards the 200 day EMA during European and Asian trading, but has pulled back just a bit. At this point, the British pound looks a bit of her stretched, despite the fact that people are celebrating the economy starting to reopen. With that, we have also seen the ADP employment numbers in the United States beat by 6 million, which of course is probably a mistake, but this could lead people into believing that the United States is the place to be again. Quite frankly, there are far too many issues in the United Kingdom think that we continue to go higher forever, and it is obvious that the 1.2650 level has asserted itself as crucial resistance.

GBP/USD Video 04.06.20

There has been a little bit of a double top in that region, so that is another reason to think that perhaps at the very least a pullback is needed. If we were to break above the 1.2650 level on the daily chart, then it looks like the market is ready to go to the 1.30 level, which is a longer-term chart target. If we break down from here, a move below the 1.25 level would almost certainly confirm a breakdown is ready to happen, and then we would probably see some acceleration at that point as well as a lot of capitulation could come into the market from the buyers who jumped in far too late to take advantage of the move.

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

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