British pound rallies again on Monday

The British pound rallied during the day on Monday, reaching towards a 1.36 handle. The market looks likely to test this area multiple times, as we can see on the hourly chart over the last couple of weeks.
Christopher Lewis
GBP/USD daily chart, May 15, 2018

The British pound has rallied rather significantly during the session on Monday, reaching towards 1.36 level above, which has been resistance multiple times. When you look at the chart, you can see that we have rallied from a significant uptrend line lately as well, so it’s likely that we could continue to see buyers jump into this market and perhaps make a significant move towards a 1.3650 level. That’s an area that has been important more than once, and a break above there could send buyers jumping into this market for a longer-term move.

Ultimately, I think that if we do break above that level we will probably try to reach towards 1.40 level above, which on the longer-term charts is of course important from both a psychological and structural standpoint. I believe that we will continue to be a “buy on the dips” market, with the uptrend line underneath offering quite a bit of bullish pressure. If we do break down below the uptrend line, things could get ugly, perhaps reaching down towards the 1.30 level. Ultimately though, this market looks as if the buyers are starting to come back in and push rather hard.

It’s going to be choppy regardless, so keep that in mind. I would keep my position size somewhat small initially but add to it every time we move a bit higher. I like the idea of building up a larger position, but I would be cautious about doing that in one quick move. Longer-term though, this could be a nice investment opportunity.

GBP/USD Video 15.05.18

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