The British pound rallied again during the trading session on Wednesday. It looks, however, as if it is hesitating a bit at the 1.30 level, which makes quite a bit of sense considering there should be a large amount of supply in that general vicinity. After all, we had broken through the back of a hammer there and previously had seen a lot of support in that area so market memory dictates that there should be some type of reaction there.
The question is whether or not we will have some type of noisy news nonsense to come through about Brexit to knock this pair back down, or if it will simply continue to go higher. I need to see a daily close above the 1.3050 level to be convinced of the upside, as the recent selloff had been so brutal and the problems behind the pound falling have not gone anywhere. We still have to worry about random headlines coming out about Brexit that could throw the market into a hissy fit, so therefore you have to be very cautious about your trading signs regardless of which are doing. The 50 day EMA is in the same neighborhood as well, so that is something that is worth paying attention to also.
Underneath, we have seen the 200 day EMA offer significant support, and then is something worth paying attention to. Having said that, this is going to be very much like the trading of British pounds a couple of years ago, where somebody will release a rumor to spoof the market and make it jump in one direction or another. Unless you have a significant amount of experience, you probably should not even be trading this currency right now. Yes, I realize that it is “exciting”, and you should keep in mind that any time you use that word to describe a financial market, it should also make you think of the word “dangerous.” With that being the case, I am trading about half the typical size that I have been in the past and will probably continue to do so for some time. A break above the 1.3050 level opens up the possibility of a move back to the 1.35 level, but that is nowhere near happening right now, so I am not overly excited or worried about it.
