The British pound has initially fallen during the course of the trading session on Tuesday only to turn around and show signs of strength again. Ultimately, this is a sign that we probably go much higher, perhaps trying to reach towards the 50 day EMA. The 50 day EMA will course attract a certain amount attention, and it should be noted that the British pound certainly is trying to find its way to the upside.
GBP/USD Video 28.07.21
If we can break above that 50 day EMA, then it is likely that the market could go looking towards the 1.40 handle. The 1.40 handle is a large, round, psychologically significant figure that a lot of people would be paying attention to if and when it gets hit. I do believe that the market will have a couple of rough days ahead, but it is obvious that we have to make some type of longer-term decision soon. The question now is what happens with the US dollar? I think we get some answers by the end of the day on Wednesday, as the Federal Reserve will release its statement.
If we do break down below the 200 day EMA, then it is likely that we could go looking towards the 1.35 handle, which of course is an area that I think would attract a lot of attention as it is an area that has been supportive in the past. That being said, you should pay attention to the fact that the previous weekly candlestick was a hammer, which of course shows significant strength. Ultimately, this is a market that I think continues to see a lot of indecision in the short term.
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