British pound has a rocky session on WednesdayThe British pound initially fell towards the 148.25 level before bouncing rather significantly. We reached towards the 149 handle before rolling over, showing signs of resistance there yet again. Ultimately, this is a market that I think will continue to show a lot of volatility, and of course there are a lot of other factors going on. The pair is extraordinarily sensitive to risk appetite, so keep that in mind.
The British pound initially rallied against the Japanese yen during trading on Wednesday but found the 149 level to be a bit too resistive to continue to go higher. On the hourly chart, we have formed a couple of shooting stars, which is a negative sign. I think at this point it’s likely that we will roll over again, for at least a short-term move. I think there is significant support at the 148.25 level, at least on short-term charts. If we break down below there, the market is likely to test the 148-level next. Otherwise, we can break above the 149.25 handle, then I think the market probably goes looking for the psychologically and structurally important ¥150 level.
I believe that volatility will continue to be a major issue in this pair, and that if you are nimble enough, you could trade this pair somewhat back-and-forth, but we do have a couple of levels that are worth paying attention to and could direct where we go over the next several days. I think it will be very volatile, so keep your position size small as it could cause quick losses if you are not careful enough. I believe that the market is going to need to pullback a couple of times to build up the necessary momentum to go higher, assuming we even can. Pay attention to risk appetite, it will have a lot to do with where we go next.