The British pound had a volatile session on Thursday, as we reached above the 1.30 level during the day, and then fell significantly. We continue to see support based upon the uptrend line, so it’s not a surprise to think that we may rally yet again. I believe that the market could continue to find buying opportunities in this pair, but the real signal for longer-term trading will be a move above the 1.3050 level, which would signify that we are going to continue to go to the 1.3450 level above which would be the top of the previous consolidation area on the longer-term weekly charts.
I believe that buying dips will probably continue to be the way to go, but I would also keep my trading position relatively small, as the market will continue to be very volatile, especially considering that there are so many comments coming out of people around the United Kingdom and the European Union involving the UK leaving. This is a market that is going to be difficult to deal with, so keeping your position small should be the best way to combat the type of volatility that we may see. Whatever you are comfortable with should be cut in half, as you can then have twice the stop loss. That gives you the ability to stay in a market that is extraordinarily volatile, but I think longer-term the buyers are going to continue to jump into this pair, because quite frankly the British pound has been oversold for some time. The volatility should continue, but as we start to make higher highs again, it may be time to start adding to that long position. Selling is not a thought yet, as I believe the absolute “floor” is at the 1.2750 level.
Written by FX Empire