The market’s volatility may increase, and traders should be mindful of their position sizing to mitigate risks.
- The GBP/USD has been trading in a tight range between 1.24 and 1.25 levels as the market looks to fight through a barrier.
- If the market breaks above the 1.25 level, the next target is expected to be the 1.2750 level, which had previously acted as significant resistance.
- However, there is support near the 1.2350 level and the 50-Day EMA, which could attract buyers if the market pulls back.
Although the market is likely to continue to try to go higher, it is uncertain whether it can break out, as there are candles near the 1.2350 level that suggest strong buying interest. Hence, if the market breaks down below the 1.2350 level, the pound could start to pull back.
It’s worth noting that the British pound appears to be struggling more than the euro against the US dollar now, so trading the EUR/GBP pair may be a better option. Although both currencies have been bullish against the US dollar, the pound has encountered a brick wall in this area, indicating that it may be slowing down momentum.
If someone chooses to short the dollar, it may be easier to do it against other currencies than the British pound, which has already been one of the best-performing currencies this year but has run into significant resistance, possibly indicating exhaustion after such a big move against the greenback. Therefore, it is essential to pay attention to volatility, which may increase at this point and work against traders if they are not careful with position sizing.
In conclusion, the British pound continues to be range-bound and may struggle to break out unless it can break through the 1.25 level. The market is likely to continue to be choppy and noisy, with a lot of short-term trading opportunities. Therefore, it is important to remain vigilant and consider trading the EUR/GBP pair or other currencies against the dollar instead of solely focusing on the British pound. The market’s volatility may increase, and traders should be mindful of their position sizing to mitigate risks. Regardless, we cannot go sideways forever, and there should be a significant move eventually. Your job is to be there when it happens. Let the markets tell you what direction they are going to go before risking much.
Ready to trade our Forex daily forecast? We’ve shortlisted the best Forex brokers in the industry for you.