The British pound initially did very little at the open on Monday, but as the Europeans came back to work, you can see that we sliced through the 1.2750 level, and then broke down to the 1.2650 level. This is a market that continues to show significant bearish pressure, as the uncertainty after the election of course will continue to weigh upon the British pound in general. Because of this, I believe that rallies will offer selling opportunities, but a break above the 1.28 level will be a very bullish sign. At that point, the market would then go to the 1.29 handle above. No matter what happens, it is very likely that we will see volatility and this is mainly due to the fact that most of the movement will come from headlines, which can happen at any moment.
I continue to sell rallies on short-term charts, that show signs of exhaustion of course. Ultimately, I think that if we do continue the bearish pressure, the market will then go looking for the 1.25 handle underneath. It makes sense that this market would continue to struggle, as not only do we have the uncertainty and Great Britain, but we also have the interest rate hikes coming out later this year from the United States. Because of that, there are several reasons to believe that this pair will continue to fall and struggle. If we did somehow break above the 1.28 handle, then I think the market is one that could be bought. Until then, it’s almost impossible to go long with any sense of comfort, as there will be so
Written by FX Empire