- The British pound has rallied rather significantly during the trading session on Monday, as we continue to see this market threaten the 1.30 level.
- The 1.30 level is a large, round, psychologically significant figure that a lot of people will be paying close attention to, so it does warrant a certain amount of attention from traders on both sides of the equation.
You can make an argument that the 1.30 level is difficult to get above, and I certainly think that there is a certain amount of psychology here, but I also recognize that we have been in a strong uptrend for a while, and therefore it’s difficult to fight its without some type of fundamental shift. We could potentially get that fundamental shift this week, as the Federal Reserve has an interest rate decision and press conference coming out, but until that comes, you are just simply speculating that something bad could happen at this point.
Sideways Grind?
You could make an argument for a bit of a sideways grind at this point, perhaps trying to work off some of the excess froth that we had seen in this market. Underneath the current trading, we have the 1.29 level offering support. If we break down below there, then the 1.2750 level is an area that a lot of people would be paying attention to, as it has been important multiple times in the past, and of course we have the 200 Day EMA, as well as the 50 Day EMA heading toward that area.
Speaking of the moving averages, we are getting fairly close to the idea of forming a “golden cross”, when the 50 Day EMA breaks above the 200 Day EMA, which is a signal that a lot of the longer-term traders tend to like. This could kick off some algorithmic trading, although I’m the first to say that it is normally a very late signal indeed.
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