The British pound does very little during trading on Friday
The British pound continues to bounce around against the US dollar in general, and I think that the 1.40 level underneath will offer significant support, especially considering that it is a large, round, psychologically significant number, and has been structurally important. However, looking at the longer-term charts we could break down below there and perhaps reach towards the 1.3650 level underneath. I believe that this market will continue to be noisy based upon inflation expectations and the United Kingdom, and of course the negotiation between the UK and the EU.
If we were to break down to those lower levels, I think that longer-term traders will come in and pick this market up. There’s an uptrend line on the weekly chart that will continue to be important, but if we were to break down below that uptrend line, this market would unwind rather drastically, sending this market much lower. The markets continue to be very noisy, but longer-term I do believe that we rally. Because of this, I look at these little pullbacks as potential buying opportunities, and personally I have stop losses just below the 1.40 level to play that psychological barrier. However, I would be even more interested closer to the 1.3650 level as well. Longer-term, I think we will try to bounce towards the 1.43 level, but it’s going to take a lot of work obviously, as there is a lot of noise out there. Perhaps the best way to trade this market is to use a small position and then add when the market works in your favor.