The British pound has been very noisy during the trading session on Tuesday, reaching as low as 1.3930, but then turning around to rally. As I look at the charts on the hourly timeframe, I can see that we are clearly trying to form some type of base, and I think this shows that we are trying to continue the uptrend, and I feel that it’s only a matter of time before we do. The 1.41 level will be targeted next, followed very quickly by the 1.43 level above.
The 1.43 level was the recent high, but I think that breaking above there should be a good sign that we are going to go to the 1.45 level next. The alternate side of the equation of course is that the market would break down below the 1.39 level, and that of course would be very negative. Ultimately, that should send this market much lower, perhaps looking towards the 1.3750 level. However, I believe that the overall bullish attitude of the market should continue, and I do like the idea of picking up the British pound as it has been cheap for months, and of course we have the US dollar selling off due to what’s going on in the bond markets.
I believe that the uptrend will eventually win the argument, and at this point I think that the only reason that we are seeing pullbacks has more to do with the negotiations between the European Union and the United Kingdom. If the word for that, this pair probably would have gone parabolic.
Written by FX Empire