The British pound has rallied a bit during the course of the trading session on Monday, as the 50 day EMA has offered a lot of support. That being said, the market is likely to continue to see a lot of choppy behavior, because quite frankly the 1.40 handle above has been massive resistance, and an area where the British pound simply does not seem to be able to get beyond. With that being said, we are most certainly in an uptrend, so you have to look at it through that prism. With that being said, I do like the idea of buying dips as they offer value.
GBP/USD Video 04.05.21
If we do break above the 1.40 handle, then it is likely that the market goes looking to the 1.42 handle. The 1.42 handle is a large, round, psychologically significant figure, but more importantly it is an area where we have seen a lot of selling pressure, denoted by the massive shooting star that we formed that level.
Underneath, the market is showing signs of support at the double bottom underneath, and therefore it is very likely there should be buyers in that area. On the other hand, if we were to break down below that level then it is possible that we go looking towards the 200 day EMA underneath which is near the 1.35 handle, which I look at as the “floor the market” overall, and I do think that a lot of traders will be defending that area. If we were to break down below that level, then it would obviously be a negative turn of events for the market.
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