The British pound initially was sideways during the day on Friday, but started to rally rather significantly as Europeans went home. Ultimately, I believe that the 1.3250 level should offer a bit of resistance, as it has in the past. Overall, I think that the market has resistance extending to the 1.3333 level, and if we were to break above there the market could go much higher. However, we have been consolidating for some time and the stochastic oscillator is starting to cross on the hourly chart in the overbought region. Because of this, I think that we will see the market pull back looking for value, but I think that longer-term we are starting to see the market to find a significant consolidation area that we can continue to trade.
For myself, I believe that the stochastic oscillator will be a great way to look for trading opportunities in this market, at least until we can break out of the larger consolidation region. I believe that the 1.30 level underneath is massively supportive, and I would be very surprised to see this market break down below there. I believe that the market will continue to be very noisy, so small position sizing and of course being quick to get in and out of the market will probably be very important. I believe that the market will eventually go to the upside, but we may be weeks away from seeing that happen. In the meantime, little bits and pieces should be offered for those who are nimble enough to take advantage of. If we were to break down below the 1.30 level however, that would be a very negative sign and would change my entire thesis longer-term as it would be a breakdown of a nice uptrend line.
Written by FX Empire