The British pound collapsed a bit during the Monday session, as we continue to see the US dollar gaining against just about everything. The 50 day EMA is cutting through the middle of the overall consolidation zone, so I think it might just be a matter of time before the British Pound somehow respects that level.
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The 1.20 level below is an important area, and I think a test of that level is likely to make a bit of noise, So I think we’ll have to wait and see what happens. If we break below the 1.20 level, we will likely see this market collapse to the 1.18 level. A break below 1.18 leads to the potential for a much bigger move down. In this scenario, I would expect to see the US dollar advance against just about everything, not just the British pound.
Pay attention to the interest rate situation in the US because rates keep rising, Which could lead to a drop in this market a lot. In fact, the market has been in a downtrend for quite some time, and I don’t expect that to change soon. In the end, we saw a lot of strength in the US dollar due to concerns about a slowdown in the global economy, which bodes well for the US dollar in general.
On the other hand, if we break above the 1.2250 level, the British pound may look to reach the 1.24 level. I think there is a lot of resistance all the way to the 1.26 level, so I don’t think the general trend will change completely until we get past that level, so I think a lot of people are going to start FOMO in this market. I don’t expect that to happen soon. So you have to be careful about getting into everything, especially if you are going to move to the top as there is a lot of work to be done to make it happen. In the end, the rallies sold off and I think this will continue into the future. Expect a lot of choppy and irrational movement over the coming days.
The chart was generated by . platform TradingView