The British pound drifted a bit lower at the open on Tuesday, reaching down towards the 1.3750 level, an area that was resistance in the past. Because of this, I anticipate that the market will probably find buyers in this general vicinity, giving us an opportunity to go long sooner rather than later. However, if we were to break down below that level, I think the market probably will find plenty of support at the previous resistance barrier at the 1.3650 level. That’s an area that was the gap from the vote to leave the European Union, and now that we have cleared that area, it should offer plenty of support. In fact, I look at it as the “floor” in the market, and I believe that we will continue to see a lot of interest in this market, looking at pullbacks as value.
Keep in mind that the US dollar is falling overall, so when we get these days where the market moves towards the US dollar, and offers value from a longer-term standpoint. I believe that we are going to go looking towards the 1.40 level over time, so these opportunities present themselves to those who are willing to hang on to the trade. I think that it’s not until we break down below the 1.36 level that I would be comfortable selling, and it looks very unlikely to happen anytime soon. Because of this, I think adding on short-term pullbacks will continue to be the best way going forward.
Written by FX Empire