- The British pound initially rallied significantly during the Tuesday session but seems to be running into serious trouble.
- This is a pair that has been very bullish as of late, and this is something that I think is finally running out of steam.
- The pair also has the issue that of course the entire continent of Europe is potentially going to be sluggish, and if that’s the case, then the United Kingdom could feel a bit of an effect form their largest trading partner.
The market has recently hit the 200 Day EMA, a barrier that a lot of people watch closely, and of course a lot of people look at as a technical barrier that can define the overall trend.
This can be a major factor to pay attention to, and therefore I believe that it could be difficult to get overly bullish in this pair. The shape of the candlestick is a bit of a shooting star, and this is another potential sign of weakness, and this could be a situation where the sellers are about to make their presence known, shorting this pair as the US dollar continues to see a rebound.
If we break below the bottom of the candlestick for the session on Tuesday, then we can drop to the 50 Day EMA, which sits just above the 1.25 level.
This is an area that a lot of people will pay attention to, as it is a large, round, psychological figure that could cause a bit of trouble. Anything below that level will continue to create even more downward pressure in this market.
At that point, things could get ugly, and the US dollar will continue to strengthen overall. On the other hand, if we break above the 200 Day EMA on a daily close, the 1.2750 level will be targeted yet again, as we have seen more than once.
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