GBP/USD rallied early on Thursday before stalling at a resistance area where sellers had turned aggressive days earlier, according to DailyForex analyst Christopher Lewis. He reads the pair as boxed into a range while Middle East uncertainty keeps traders from committing to a direction.
The British pound climbed against the US dollar early on Thursday, then ran into a resistance barrier where supply had entered the market aggressively several days earlier, according to DailyForex analyst Christopher Lewis. He describes the pair as trying to form a shooting star just above the 200-day EMA, a candle shape that raises the question of whether sellers step back in.
Why the dollar is hard to fight
Lewis notes that US interest rates dipped a touch, which should weigh on the dollar. Even so, he argues it remains difficult to trade aggressively against the greenback. If one currency probably has a good shot at pushing back, he says, it is the British pound.
That view sits against a backdrop of caution rather than conviction. Lewis frames sterling as a gauge of the dollar itself: if the pound falls, the dollar strengthens against multiple other currencies, and if the dollar falls apart, the pound stands to be one of the biggest beneficiaries.
A range with no clear break
Questions about what happens next in the Middle East are causing some chaos, Lewis writes. He sees the market hanging around the same area rather than reaching for a decisive move in either direction.
Because GBP/USD tends to trade within a range and currently sits near the middle of last year’s span, some pause makes sense to him. He allows for a possible short-term selling opportunity but describes the setup as no man’s land.
Source: DailyForex
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