Originally published by AxiTrader
Except for a brief foray to 1.50 when traders bet that the Brexit vote was going to fail, the pound has not been above its 200-day moving average since November 2015 when it was trading around 1.54.
But as prices fall so too do moving averages. And when prices stabilise in a range - as GBP/USD has since the October flash crash low - moving averages catch up to prices. Eventually even long moving averages like the 200 day one catch up.
And that is exactly where GBP/USD finds itself this morning with a break of 1.2615 representing a tantalising resistance level as it is both the recent range high and the 200-day moving average.
Since the flash crash forays into the 1.26/1.27 level have been swiftly rebuffed. Not exactly a graveyard for the bulls but certainly a level where bulls become more cautious and less inclined to push their positions - or luck.
So this level looks to be formidable resistance in the near term.
Naturally what happens to the US dollar is going to be critical for the pound, as is pre-positioning ahead of the French presidential election in EUR/GBP. On the data front, UK retail sales this Friday and Q1 GDP on the 28th also provide important trigger points.
I'm not sure whether this level will give way or hold. But either event will likely prove a powerful signal for me and other traders.
Have a great day's trading.