The British pound has fallen a bit during the course of the trading session on Tuesday to reach down towards the 50 day EMA. Beyond that we also have a double bottom underneath that could come back into the picture, giving buyers a reason to look for support. If we were to break down below there, then it is possible that we could go down to the 200 day EMA which is closer to the 1.35 level. At that point, then you are talking about a trend defining point, and if we were to break down below there, we would have to see some type of flush lower that could send this market towards the 1.30 level.
GBP/USD Video 05.05.21
On the other hand, if we continue to see buyers on these dips, I anticipate we probably do not have much further to go to the downside before we continue to build up positive pressure to go looking towards 1.40 level above, which of course has been a massive barrier as you can see. If we can break above there, then the British pound is likely to go looking towards the 1.42 handle above which has been significant resistance, and I think what we are looking at in that general vicinity is the gateway to reach towards the 1.45 handle. Ultimately, it is likely that we will continue to see a push higher, due to the fact that most people are betting on the “reopening trade”, which generally means that the US dollar will probably continue to drop. That being said, in the short term it looks like we are simply chopping around and building up inertia.
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