The British pound initially went sideways during the day on Tuesday, and then broke higher, reaching towards the 1.2775 level. Above there, I think the 1.28 level offered resistance, so if we can break above there I think that the market could then go to the 1.30 handle. That’s a significant resistance barrier, so I of course would be willing to throw money into the market when that happens. Alternatively, we could pull back to the 1.2750 level and a supportive candle in that area could have me buying as well, as it could be a sign that we are trying to build up enough momentum to make the breakout happen. With all of the choppy volatility, I believe that the market continues to be difficult to deal with, as we have a lot headlines coming out of the discussion proceedings between the United Kingdom and the European Union.
I believe that the volatility continues, and therefore it’s a nice market to trade for short-term traders. If we were to break down below the 1.27 handle, then I would be a seller again, reaching down to the 1.26 level underneath. The market should be active, as it has been the center of attention for so long. I believe that the market will eventually break out to the upside, but we need to make quite a bit of momentum in order to do so. On that move, I believe that the 1.30 level will be the first target, and then possibly the 1.3450 level.
Alternately, if we break down below the 1.27 handle, the market not only goes down to the 1.26 level. A breakdown below there would be very negative and essentially catastrophic for the British pound in the short term.
Written by FX Empire