The British pound has rallied significantly at the beginning of the Monday session, but ran into a significant trouble at the 1.4075 level. We pulled back from there, and it now looks as if the 1.40 level will be tested for support. If it holds, I believe that it’s only a matter of time before the market finds enough momentum to turn around and go to the upside. I believe that a “fresh new high” would be a buying opportunity and we could continue to go much higher, perhaps towards the 1.43 level, and then eventually the 1.45 level based upon longer-term charts. I believe that the 1.45 level is going to be difficult to crack above, and this might be what we are witnessing right now: the market trying to build up enough momentum to finally break out.
I recognize that there is a significant amount of support just below the 1.40 level as well, both from a psychological and structural standpoint. I think at this point, it’s probably better to buying this market on dips than anything else, but I would also be slow to add to this position, preferring to allow it to prove itself going forward. I think that the market should continue to find buyers, but these types of areas on the chart can often take a lot of effort to break above. I think that’s what we’re watching now, the market is trying to build up enough inertia to finally go higher.
Written by FX Empire