The British pound rallied a bit during the trading session on Thursday, but slow down as far as the rate of climb is concerned. The market should continue to find buyers underneath, and I think that while the market is very bullish, it probably needs to pull back to find enough value to continue. I believe that the 1.40 level being broken above was a psychologically significant move for the market, and it should now offer a significant amount of support underneath. In fact, I welcome pullbacks as an opportunity to pick up value, as we have gotten a little bit ahead of ourselves. The 1.40 level being broken had me looking for the 1.45 handle above, and I still think that we get there.
I also recognize several areas between here and there that could offer support, so at this point I don’t want to short this market, not even for a small and short-term trade. I believe that the 1.45 handle above is going to offer a significant amount of resistance, but from a psychological standpoint more than anything else. I believe that by the end of the year we are trying to reach the 1.50 level above, and that is the bias from which I trade this market. However, if we were to break down below the 1.40 level, that could send this market much lower. At this point though, it appears that the US dollar has quite a bit of pressure upon it, and I think that is going to continue to be the case.
Written by FX Empire