The British pound has come back and forth during the day on Friday, hanging about the 1.3750 level. Were in an area that I think is going to continue to offer a bit of noise, as it is previous support and resistance.
The British pound has initially tried to rally during the day on Friday but rolled over a bit to reach down towards the 50 EMA on the hourly chart. I think there’s plenty of support below though, and most certainly at the 1.3650 level. I believe that the market should continue to be very noisy, and we could drift a little bit lower from here, but I think eventually it gives us an opportunity to pick up value at lower levels. Ultimately, I believe that the 1.3650 level is the defining level for the uptrend, so if we can stay above there I think we will eventually get a buying opportunity that’s worth taking.
If we did breakdown below the 1.3650 level, I think this pair would fall very hard at that point, because it would be essentially “throwing in the towel” when it comes to the outlook for the British pound. I think this is a simple retest for the longer-term move though, so it’s only a matter of time before the buyers show up, so on a supportive daily candle, I’m a buyer. I would also buy on a break above the highs from the Friday session, near the 1.3825 level. At that point, I would anticipate a move back to the 1.40 level after that, which is a major barrier and level on longer-term charts. I believe at that point, we would then target the 1.43 level. Expect a lot of noise, but eventually I’m looking for an opportunity to take advantage of value.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.