The British pound broke out to the upside during the day on Tuesday after initially dipping lower. Now that we have broken above to make a “higher high”, it looks as if the market is going to go looking towards the 1.29 handle. That level of course has a certain amount of psychological significance to it, and a break above there would be a very bullish sign indeed. Just below, at the 1.2750 level, I feel that there is a significant floor in the market as it was so massively resistive in the past. That being the case, it’s likely that buyers will return every time we dip, and I do believe that the British pound has been oversold as of late due to election polling. It looks as if the conservatives will still win the election, and therefore the uncertainty should be just about gone when it comes to where Britain is going next.
I continue to look at this market as one that you can buy dips in, and will take advantage of it as such. Given enough time, I believe that we will reach towards the 1.3050 level again, offering a nice opportunity for a longer-term position over the next several sessions. If we can break above there, I believe that the market then goes looking towards the 1.3450 level above over the next several weeks if not months. I believe it’s only a matter of time before reset level and now people will look at this recent pull back as value that should have been taken advantage of. For myself, I already have gone long of this market and will stay “long only” if we can stay above the 1.2750 level underneath, as it is a longer-term barrier.
Written by FX Empire