The British pound has been very choppy during the trading session on Thursday, dropping down to the 1.3130 level, and then bouncing towards the 1.32 handle. I believe that this will continue to be how the market goes, as we have a lot of moving pieces when it comes to the British pound and the British future. As they are leaving the European Union, there is going to be a lot of noise, and a lot of concern about the eventual situation they find themselves in. I think given enough time, the British pound will rally, but right now there’s far too much in the way of uncertainty for traders to jump in hand over fist. That will continue to be an issue, but eventually we will find some type of clarity. In the meantime, I expect a lot of choppy trading and this to be the Roma short-term traders only. Perhaps using something like a stochastic oscillator to find overbought and oversold conditions on short-term charts might be about the best way to play this market. Either way, I would not be using large amounts of capital to trade this market, because the volatility could jump suddenly.
The overall consolidation continues between the 1.30 level on the bottom, and extending to the 1.3050 for support. However, the 1.3250 level is going to be resistance, extending towards the 1.3333 handle. Overall, I expect this market to be a good scalping environment, but that’s just about it. The Federal Reserve is likely to raise interest rates but then again most of the market has already price that in. Because of this, I don’t have any interest in trying to hang onto a position for a longer-term move, as I think we are simply treading water between now and the next major event.
Written by FX Empire