The British pound initially tried to rally during the trading session on Thursday but found resistance again at the 1.30 level. This is a simple continuation of what we have been seen for some time, so it is very likely to continue to be something worth paying attention to. The flag that has been being built as a massive amount of resistance found at the 1.30 level, and therefore it’s not a huge surprise the think that perhaps the market will continue to be very shaky to say the least.
That being said, it should be noted that the flag that is being built is simply a holding pattern for all of the headline risk and nonsense that’s coming out of Brexit. With the massive amount of uncertainty, it’s not a huge surprise to think that perhaps we would struggle. With that, I like the idea of waiting for a breakout above the 1.30 level in order to put a lot of money into this pair, but I recognize that the flag pole suggests that we could go as high as 1.3 a. Historically speaking, the British pound is very cheap so that would not be a major surprise.
To the downside I expect that the 1.28 level will continue to be massive support, so I would be willing to buy down there as well. The way it is held up so far there’s no reason to think that it’s going to change in the short term, so one has to assume that things remain the same until they aren’t. The 50 day EMA is getting ready to cross above the 200 day EMA which of course is a longer-term signal called the “golden cross” that a lot of longer-term traders will be paying attention to. All things being equal, I do believe that the British pound has bottom that the 1.20 level, so now it’s a question of whether or not we can continue to go higher. Even if we do break down below the support underneath, I suspect that the 1.25 level will be massive support as well. Ultimately, this is a market that I think is ready to go higher, it just needs some type of excuse to start moving. With that being the case, I am cautiously optimistic, but I look at value as the main driver of getting involved as I believe we have plenty of time.
