- The British pound has rallied a bit against the US dollar during the trading session on Monday as we continue to see the uptrend play out.
- We have given back about half of the candlestick though, so I think we are starting to get a little exhausted. Nonetheless, I don't think the British pound is where I would play in favor of the US dollar and try to take a short position, despite the fact that I might not necessarily be a buyer either, because we are approaching a very significant resistance barrier in the form of 1.3650.
- And when you look at longer term charts, this is an area that's been a lot of trouble. It really isn't until we break above 1.3650 that the pound truly has another air bubble that they can take advantage of. That doesn't mean it won't go higher. It doesn't mean that I'm even right on this, but what I look at is that there are easier ways to play the dollar out there right now.
- For example, if the US dollar does start to pick up strength, the Australian dollar, the euro, they're both likely to be shorted. I'd rather be over there than trying to fight the British pound. The British pound is stronger than many other of its contemporaries, mainly due to the fact that they have an agreement with the United States. Unlike Germany, unlike Australia, unlike Canada. So, their part in the trade war is done. There are no unknowns at this point. So, it makes the British pound a little bit different than others, and it does make it stronger.
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Chart is an Indicator
When I see this chart go higher, my first thought is buy the British pound against other currencies. So, this is almost like a secondary, even tertiary, technical signal for maybe the pound against the Japanese yen or the pound against the New Zealand dollar, et cetera. When I look at this, I see it as a signal. Now, if we break the 1.3650 level, then we probably see the US dollar fall against everything. So, I would look for other currencies to catch up here. Again, not really a trade setup here, but it is a good indicator for both the pound and the dollar, maybe against other currencies.
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