The British pound rallied significantly during the trading session on Thursday, breaking above the 1.30 level which of course attracts a lot of attention. By breaking above the top of the shooting star from the Wednesday session, this shows quite a bit of power for the British pound as traders were celebrating Boris Johnson shuffling the cabinet, perhaps in a bid to show signs of stability in London.
GBP/USD Video 14.02.20
At this point, the 50 day EMA seems to be offering a bit of resistance, and while I do think that the British pound will eventually recover, short-term pullback makes quite a bit of sense, as we are already starting to see a little bit of selling later in the day. Looking at this chart, if the market was to simply go higher and break above the 50 day EMA, then I think the 1.32 level is in focus. I do like buying the British pound on short-term pullbacks, but this goes to short-term charts, so you have to be a scalper or an intraday trader in order to take advantage of this. To the downside, if the market was to break down below the 1.2875 handle, then it’s likely that the market will go looking towards 1.28 level, possibly even the 200 day EMA after that.
The greenback is extraordinarily strong as seen against several other currencies right now, so the fact that the British pound could rally shows just how much underlying pressure there is when it comes to the British pound as it is historically cheap. Having said that though, you need to hang on to a lot of volatility if you are a longer-term trader.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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