The British pound initially tried to rally during the trading session on Friday, but found the 1.35 level to be far too resistive to continue. The jobs number coming out with an addition of 220,000 was bullish enough for the US dollar to send this market lower. I believe that the 1.3333 handle continues to be massively supportive though, and it does in fact look like the market is going to respect that level. Because of this, I believe that the short-term buying opportunity has just presented itself, and that we should go back towards the 1.35 handle given enough time. A break above there then sends the market looking to the 1.3650 level, where we should see a massive amount of resistance due to a major gap on the charts.
If we did breakdown below the 1.3333 handle, the market been probably drops to the 1.32 handle. That’s an area where we have seen a significant amount of noise, but I think if we do reach down to that area is probably going to break away and go looking towards the 1.31 handle underneath. This is a market that continues to build up momentum every time we pull back, and I don’t think that’s going to change anytime soon. I am a buyer of the dips, but recognize that there are headlines out there that can change things rather rapidly, and therefore you need to be careful. The volatility continues to be an issue, but this can easily be dampened by a smaller than usual position, therefore keeping your risk limited in a market that could be very difficult.
Written by FX Empire