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MENAFN- Daily Forex)
The British pound has been back and forth during most of the trading session on Wednesday, as we are trying to sort out whether or not we can continue to go higher. Keep in mind that the 1.30 level above is a major psychological figure, and it will attract a lot of options traders out there. This is an area that has been important multiple times in the past so it's not a huge surprise to see the market behave like this.
The size of the candlestick doesn't tell us much other than we have a lot of questions asked about what's going on around the world right now. The market going back and forth and not really knowing what to do for the day other than to simply follow the same overall direction tells you that the trend probably isn't over. However, the 1.30 level looks to be very difficult to get above, so I think this may take some work. It's also worth noting that after the CPI numbers came out cooler than anticipated, and a bit of irony, the bond yields in America started to rise again.
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The trend in this GBP/USD pair has obviously been very bullish over the last couple of months but it's also worth noting that we are hanging around the 61.8% Fibonacci retracement. A lot of traders will be looking at that as a potential selling opportunity, so I do think that the volatility will continue to be a bit of an issue here, which makes quite a bit of sense considering the traders are still trying to sort out whether or not the United States is going to head into a significant recession, and how long that's going to be. Ultimately, this is a market that I think is worth watching, but the fact that we broke above the short term range at one point during the trading session suggest that there are still plenty of buyers out there. However, if we were to turn around a break down below the 1.2860 level, then we could see a deeper correction.
EURUSD Chart by TradingView
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