The British pound started to rise during the course of the day on Friday, reaching towards the 1.3325 handle. We pulled back from there, only to find support at the 1.3275 level underneath. Ultimately, the market continues to show signs of bullish pressure, and I believe that eventually the British pound will continue to reach towards the 1.3650 level above, which has been very important as it was the scene of the gap lower after the surprise a to leave the European Union. When you look at the weekly chart, we have bounced from a trend line, and now it looks like we’re going to go much higher. There will be pullbacks occasionally, but those pullbacks should be thought of as value as the British pound is buoyed by the Bank of England raising interest rates relatively soon.
As soon as we can get above the 1.3650 level, the market is likely to go much higher, and inner more of a “buy-and-hold phase.” Alternately, this is a market that I think cannot be sold, unless of course we were to break down below the 1.30 level as it would be not only a breakdown below the uptrend line on the weekly chart, but also a breakdown below the large figure. Because of this, I think that the market has more than enough buying pressure underneath to keep this going higher, and therefore I don’t have any interest in shorting. At least not until we get below that level, which I don’t see that happening anytime soon. The market continues to be volatile, but I believe it offers plenty of opportunities when we pull back and look for lower levels. The US dollar continues to soften, as economic numbers later in the week also worked against the value the greenback.
Written by FX Empire