The British pound was very volatile in general during the day on Wednesday, bouncing around the 131.70 level. The market has filled the gap from several sessions ago, and I think now we have a lot of decisions to make. Because of this, I recognize that the British pound might be difficult to deal with, as I recognize that the 1.3250 level should be resistance. If we can break above there, then we start to look at the 1.3333 handle, which is the top of the larger consolidation area that we have been stuck in for some time. I still believe that there is significant support extending from the 1.3050 level down to the 1.30 level, so given enough time it’s likely that we will go back and forth, probably bouncing from both these levels. It makes sense though, because there are so many headlines crossing the wires on an almost daily basis about the turmoil of separating the United Kingdom from the European Union, I believe that the British pound will continue to struggle to make significant gains on a longer-term basis, at least for the time being.
If we do break down below the 1.30 level, that would be a very negative sign, perhaps sending this market down to the 1.2750 level, and then eventually the 1.25 level after that. I believe that small position sizing and some type a range bound trading system is probably needed, and therefore only the most noble of traitor should continue to be trading in this market. From a longer-term standpoint, there isn’t much to signify which direction we should go. Overall, I believe that eventually we will find buyers and break out to the upside, but we are a long way from doing so.
Written by FX Empire