The hammer that form during the week is a very bullish sign, as it shows that the 1.32 level looks to be resiliently supportive. It’s an area that features a lot of noise between the 1.30 handle and the 1.32 level back during July 2016. This is a market that has been impulsive to the upside, and although I am not an Elliott Wave trader, it would not be a stretch to look at the recent pullback as a “wave two”, meaning a corrective phase, and that should put the beginning of “wave three”, which is the most impulsive wave and where most of the profits are found during a trend.
On the other hand, if we break down below the hammer for the week, that would be a very negative turn of events, and could send this market looking to the 1.30 level, and then lower than that, perhaps reaching towards the 1.25 level after that. Overall, this is a market that has been very noisy due to the Bank of England being a bit more hawkish during the statement this week. I believe that the market will continue to see a lot of noise, but quite frankly I believe that we are getting close to the end of the pullback. Either way, it’s going to be very noisy and as a result you should be very cautious about putting too much money to work initially, but I would add to a position if it continues to grind to the upside.