Eventually, we will break out of this box and take off for a bigger move.
- The GBP/USD rallied a bit during the trading session on Thursday, as we have broken above the 50-Day EMA and the 200-Day EMA indicators.
- By doing so, we have tested the 1.22 region, which is an area that has been a little bit noisy in the past. We have a larger range that we have been dealing with, with a 1.24 level being significant resistance that extends to the 1.25 level above.
- The 1.25 level is obviously a large, round, psychologically significant figure that a lot of people will be paying close attention to, and an area that marks the top of the overall double top.
At this point in time, it’s likely that we will continue to see a lot of noisy behavior, as we are trying to figure out where to go next. Alternatively, the 1.20 level underneath should be a significant support level, and if we were to break down below there, then it’s possible that we could go down to the 1.1850 level underneath. Breaking down below that level, then I think there’s a huge “air pocket” underneath, and therefore it’s likely that we would see the market drop down to the 1.15 handle.
Looking to Short Signs of Exhaustion
On the other hand, if we do break above that 1.25 level, then it’s likely that we could go much higher, perhaps even all the way to the 1.30 level above. The situation that we have now is a noisy market, but it should be noted that the US dollar is trying to strengthen during the middle of the day, and we have seen a significant selloff. This is more likely than not going to be a situation where we eventually break down, but whether that happens right now or later remains to be seen. I’d like to short signs of exhaustion, but we don’t quite have it yet.
With this being the case, it’s likely that we will continue to be very noisy, and therefore you will probably need to be very nimble, to say the least. After all, the market is likely to continue to be one that could shake you out if you are overexposed at this point. Eventually, we will break out of this box and take off for a bigger move.
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