• The GBP/USD has rallied ever so slightly during the trading session on Monday, but it looks as if it is not quite ready to get aggressive to the outside yet.
• At this point, I think we’ve got a situation where the market is likely to continue to see a lot of noisy behavior, but not necessarily behavior that is going to be aggressive.
• I think at this point, traders are starting to focus more on the holidays than anything else, and therefore I think it’s a situation where you have a lack of liquidity that is going to make this for very lackluster trading.

If we do break down below the 200-Day EMA, then we could see the British pound looked towards the 1.20 level underneath, and of course the 50-Day EMA. Anything below those 2 levels could be a bit more aggressive and could see more of a fall in the price of Sterling, but right now I’m not sure what the catalyst would be.
 

Cut Down Your Position Size

I’m not sure what the catalyst would be for much higher pricing, but I do recognize that if we were to break above the 1.25 level, it opens the possibility of the British pound going higher. In that scenario, we could be looking at 1.2750, followed by 1.30.

Regardless, this is a market that I think is probably just simply going to turn for a while, and I think that’s probably going to be the attitude of most markets. This time of year is very difficult trading, because quite frankly there just isn’t a whole lot going on. While this is Christmas week, next week is even worse, because it is between 2 of the biggest holidays of the year. The one thing that you must do this time of year is cut your position size down.

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