The British pound has broken down a bit during the course of the week again, but just as we had seen during the previous week, the 1.3750 level has offered support. By doing so, it suggests that we are going to eventually try to go higher, and a break above the top of the candlestick for the week could open up a move towards the 1.40 level.
GBP/USD Video 05.04.21
The US dollar has been rather strong against most currencies, but it should be noted that the British pound has held up quite a bit better than its counterparts. This sets up an interesting situation, because you can either get long of this market and try to short the EUR/USD pair, assuming it breaks down, or you can simply play relative strength and short the EUR/GBP pair. This is a process called triangulation, something that I hope you look into.
The 1.40 level above has been very resistive, but if we were to break above there then it opens up the possibility to the 1.42 handle, an area where we have seen a lot of resistance in the past and I think it probably is going to take multiple attempts to get through there. I suspect that the next couple of months is going to be a very choppy affair, with the 1.35 level underneath being a massive support level and perhaps the current “floor the market.” In general, I recognize this is a market that is in an uptrend, and that should always be in the back of your mind, despite the fact that yields in America continue to rise. Because of this, I am looking for buying opportunities here specifically.
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This article was originally posted on FX Empire