GBP/USD Forecast – British Pound Bounces From of Trendline

GBP/USD Forecast Video for 05.09.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied a bit during the trading session on Monday, as we have bounced from a major trendline. At this point though, you need to keep in mind it was Labor Day in the US, therefore it’s likely that a lack of liquidity has a lot to do with where we are sitting. The real interest will be in the market on Tuesday, when everybody is back to work, and perhaps more importantly, the fact that the liquidity should pick up as traders are coming back from summer break.

All things being equal, you need to pay close attention to the 50-Day EMA above, which should offer a little bit of resistance. If we break above there, then it’s likely that we could go much higher, perhaps reaching toward 1.30 level. The 1.30 level is a large, round, psychologically significant figure that a lot of people would be paying close attention to and I would anticipate that we would see a lot of resistance in that general vicinity.

On the other hand, if we turn around and break down below the bottom of the uptrend line, then we could test the 200-Day EMA which sits just below there. Ultimately, this is a situation where I think you got a lot of noise just waiting to happen, and we do have to determine whether or not we are going to see a resumption of the overall uptrend, or if we are going to challenge all of that support. For what it is worth, the weekly chart looks really ugly at the close of business on Friday, so it will be interesting to see whether or not that downward pressure picks back up.

I think at this point, we need to let the market decide what it is going to do, and trade accordingly. Pay close attention to both moving averages, the 200-Day EMA underneath and the 50-Day EMA above. If we break out of those moving averages, that’s probably the direction that the market is going to start heading toward. Ultimately, we are in an uptrend, but we are most certainly testing the resolve of the bullish traders in this market. The next couple of days could be crucial.

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