The British pound rallied a bit during the trading session on Wednesday, reaching towards the 1.33 handle. It looks as if we are trying to take out the recent highs, which could have massive ramifications for this pair. We can make a fresh, new high, and then we will go looking towards the 1.35 handle. This is an area that has recently caused a major turnaround, so it follows that we would try to retest that area to see if it is a real resistance barrier.
In the meantime, the one thing you should keep in mind is that no matter what happens, there is always somebody out there willing to buy the British pound. We have Brexit going on, which people don't seem to be paying much attention to right now. It seems like there is some type of mental gymnastics available at any moment that can push the British pound higher, so it is a bit difficult to get short of this market anytime soon. This does not mean that you should jump in with both feet; rather, that you should look at pullbacks as potential buying opportunities. We have not had a substantial pullback yet, and I would love to see an even deeper one than we had last week. Nonetheless, it looks as if it is going to be very difficult to short this market anytime soon.
It should also be noted that the 50-day EMA sits just above the 1.30 level, which is going to continue to be an indicator that people watch. Furthermore, the 1.30 level is a large, round, psychologically significant figure, and that in itself attracts a certain amount of attention. We will eventually see some buying pressure on these dips. That is the only way I am willing to look at this market: one that you should be buying. I will not be a seller anytime soon, unless there is a definitive “no-deal Brexit” situation. One thing that traders have learned is that every time it looks like we are not going to have a deal, somebody steps back and says “Wait a minute, maybe we can extend…”
