The British pound rose again during the session on Monday, as we have stabilized over the last couple of days. The selloff was rather drastic, but at this point we have the 1.2750 level underneath. The 1.2750 level was massive resistance in the past on a longer-term chart, so it should now be massively supportive. As long as the British pound can stabilize in general, this market has much more likelihood of going higher than lower. I believe in buying dips until we break down below the 1.2750 handle, which has me feeling like a larger and longer term buying opportunity is presented itself. I believe that the selloff was a bit overdone due to political polls, which of course have been wrong all year. The market should continue to be one that will be volatile, but given enough time it will favor the upside as far as I can see.
Longer-term outlook
I believe that the longer-term outlook for this pair is bullish, but I also recognize that you will have to be able to deal with a lot of noise in the meantime. Once we break above the 1.29 handle, I feel that the market will probably start to show a little bit more bullish pressure, as the market will have caught quite a bit of attention from other traders as well. In the meantime, I believe that buying the dips can be done, but you may be better served doing this from a short-term perspective, and of course using smaller time frames and positions to use this bias. If we were to break down below the 1.2750 level, at that point in time I feel the market should continue to break down rather significantly. That of course would change the overall outlook in general.
Written by FX Empire