The British pound has rallied significantly during the course of the trading week as we have recaptured the 1.37 handle yet again. Because of this, it looks as if the market is going to continue to see a significant amount of pressure in both directions. Quite frankly, the British pound has just saved itself, so that is something worth paying attention to. Over the longer term, I do believe that the British pound will have to make a bigger move, and it is clear that we have a significant amount of support underneath to keep it somewhat afloat. As long as that is the case, then I think you still have to look at the possibility of a recapture of the highs during the previous week.
GBP/USD Video 30.08.21
To the downside, the 50 week EMA has offered support near the 1.36 level, and therefore I think you have to look at it as a potential opportunity for support, just as the 1.35 level will be. I think given enough time we will continue to see the market trying to recover as the Federal Reserve has come and gone with its Jackson Hole statement, suggesting a relative flexible approach to tapering, and that seems to be making traders comfortable enough to start shorting the US dollar again.
At this point in time, we are in an uptrend, and it certainly looks as if we are fighting to the nail to stay in that uptrend. Because of this, I think we are looking at a scenario where traders will try to push to the upside and test the 1.40 handle again, but there is a ton of resistance between here and there on short-term charts.
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This article was originally posted on FX Empire
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