British pound forms hammer at vital level for the week
The British pound has been rather noisy during the week, but as we start to unwind towards the weekend, it looks as if we are going to form a bit of a hammer, which of course is a bullish sign. If we can break above the 1.3650 level, that should put this market back into an uptrend, and we should continue to go higher. This uptrend line holding is vital, as it is the last vestige of support. If it does in fact hold, I think this will end up being a nice value play for most traders around the world.
While it is known that the Federal Reserve is likely to raise interest rates, I believe that this is more of a reaction to the “risk on” attitude that we are seeing around the world, so we could very well rally from here. This has been a nice uptrend for over a year, so obviously it’s going to take a bit to kill it. Beyond that, we have been oversold for a while, and when I look around the Forex world I can see that the US dollar looks ready to roll over a bit in general, as it had gotten far ahead of itself against multiple currency such as the Australian dollar, Japanese yen, and of course the Euro. There’s no reason to think that the British pound would be any different, so I think we may get a bit of a pop here. If we break down below the bottom of the candle for the week though, that would be very ominous indeed.