The British pound continues to be one of the more volatile currencies around the world, and that makes quite a bit of sense as we have had so many shocks over the last several months. I still recognize that this pair is probably one that you need to be very careful with, and position sizing will be crucial. By crucial, I mean you need to be small with your size going into the trade, and then perhaps adding on to your position as things work out in your favor. Otherwise, you are best served stepping to the side and completely ignoring this particular currency pair. However, I do recognize that a lot of you will want to trade this news event, so while I urge caution, I would also say that it is very doable if you will.
Rally on Tuesday
We did rally on Tuesday, but I recognize that there is a significant barrier just above at the 1.2750 level. This is an area that was massive resistance in the past, and then became support. Because of this, I am going to wait until the end of the session to place any trade, and that is probably prudent considering that the Federal Reserve also has a meeting during the day. Once the dust settles from that announcement and volatility, I believe that we should have a bit more clarity when it comes to this particular market. If we can break above the 1.2750 level in close above there, I am willing to buy. Alternately, if we get an exhaustive candle in that area, perhaps on the four hour chart, I am willing to sell. There are a lot of things moving the British pound rhino, and of course you have to keep in mind that there is a lot of headline risk currently also.
Written by FX Empire