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Christopher Lewis
GBP/USD

The British pound has rallied quite significantly during the trading session initially on Tuesday and broke above the highs from the Friday candlestick of last week, and the previous session on Monday. This is a bullish sign in a market that has been struggling to find its way as of late. That being said, one thing that should be paid attention to is the fact that we are coming close to the 200 day EMA, an area that does seem to attract a certain amount of trading.

Because of this, I would not get overly aggressive, and I do recognize that the market is likely to see a lot of choppiness in this area. I frankly, the area between the 50 day and 200 day EMA tends to be a bit of a “dead zone” where the market tries to figure itself out. Because of this, a lot of times we will simply slosh around back and forth.

GBP/USD Video 08.07.20

If we break above the 200 day EMA, then I think it is likely that we go looking towards 1.2750 level, an area that has been important more than once. Because of this, I would then start to look for some type of momentum to pick up after a move above the 200 day EMA. If we break down below the 50 day EMA underneath, then I think we go looking towards 1.23 level next. Either way, I think we are going to see a lot of noisy trading as the world deals with Covid, Brexit, and whatever the world is going to look like post pandemic.

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

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