British Pound Forming an Inverted Hammer for the Week

The British pound initially tried to rally during the course of the week but gave back gains near the 1.32 handle. This is an area that has been noisy during the last several weeks, but at this point in time, it has held quite stringently. If we were to break above the 1.32 handle, then the 1.34 level is the next area that I think you probably see sellers there as well. We have been in a downtrend, so it does certainly make quite a bit of sense that we would see sellers come back in more often than not.

GBP/USD Video 21.03.22

If we were to break down below the 1.30 handle, then it is likely that the market could go looking towards the 1.28 level. That is an area that has been supportive previously, so if we break down below there, it would truly be a meltdown. On the upside, if we were to turn around and rally is likely that we could reach towards the 1.35 handle, which is an area that has a lot of psychology attached to it and of course would coincide nicely with that downtrend line that we had been respecting for so long previously.

Looking at this chart, it does suggest that any time we rally there will be sellers jumping in to take advantage of “cheap dollars.” Ultimately, this is a market that I have no interest in buying in the meantime unless, of course, something changes quite drastically. A bounce from the 1.30 level does make a certain amount of sense, so I look at it is simply a function of support and resistance showing itself again.

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