The British pound went sideways initially on Monday, but then dipped slightly to find support, only to bounce again. The Americans were celebrating Labor Day, so most of the action would’ve been during European trading hours. Ultimately, this is a market that has quite a bit of conflicting pressure going on, as people are starting to doubt that the Federal Reserve will raise interest rates this year, but at the same time there are a lot of concerns with the United Kingdom leaving the European Union. I believe that this market will continue to be very choppy, and because of this I suspect it’s probably best to trade in small positions. I’m looking for a pullback from here, and I believe that the market should then go down to the 1.2850 level over the longer term. I believe that the 1.30 level above is massively resistive, but if we broke above the 1.3050 level, I think that the buyers will take over again.
The only thing I think I can count on is going to be choppiness. The market will continue to be very noisy, but it looks as if the market may be looking for some clarity. I think it should be difficult to find, as the noise in the markets continues to increase. Keep in mind that liquidity doesn’t increase until next week sometime, as most traders are away at holiday or are just coming back to the firm.
Written by FX Empire