The British pound has pulled back a bit during the session on Monday but found enough support near the 1.37 level to have buyers come back into the market, and it looks as if the previous uptrend line should continue to support this market, and we could go much higher. If we can clear the 1.38 level, the market then goes to the 1.39 level, perhaps the 1.40 level above. If we can break that level, then the market could go much higher, perhaps reaching towards the 1.43 level.
If we were to break down below the 1.37 level rather handily, then we could unwind down to the 1.35 level underneath, but at this point it looks as if the buyers are trying to make some type of statement. Remember, the interest rates in America are rising so that of course helps the US dollar, but there is also the reality that the Bank of England will be raising interest rates down the road. Because of this, I think that plenty of value hunting is going on.
Expect a lot of volatility and I would be very cautious about adding too much into the position right away, but I do think that this offers a nice opportunity. Adding on confirmation of bullish pressure is probably one of the best ways to play this market, because there are a lot of questions out there. This means volatility, but also opportunity for those who can’t deal with it.