The British pound fell against the US dollar during the Monday session, reaching towards the 1.3250 level. This is an area where I would expect to see
The British pound fell against the US dollar during the Monday session, reaching towards the 1.3250 level. This is an area where I would expect to see support though, and on the hourly chart we are starting to form hammers. These hammers offer a sign of hope for the buyers, and I think if we can break above the 1.3320 level, the market is ready to go higher. A breakdown below the 1.3250 level would be negative though, perhaps sending this market down to the 1.30 level longer-term. That’s an area where I anticipate seeing even more support, so I think it’s only a matter of time before the British pound turns around.
The Bank of England looks likely to raise interest rates in the relative near future, so I think that will continue to put bullish pressure on the British pound although there is a lot of uncertainty going forward. I think that the US dollar strengthening is temporary, at least against this particular currency. However, if we break down all you can do is follow the markets. I think the 1.30 level will be a bit of a “floor” in the market, but I also recognize that any rally from here will struggle near the 1.34 handle. It’s not until we break above the 1.3650 level that we get the “all clear” for a buy-and-hold situation, and I don’t think that’s coming as soon as once thought. The bullish pressure should continue to be part of this market, and I think that the noise will continue. However, I think of the short-term the buyers will certainly get aggressive, as we have sold off a bit too quickly for the longer-term trend that we have seen turned around. Ultimately, volatility continues.
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.