The British pound has rallied significantly to break above the top of short-term range, but we still have to worry about the 1.3825 area as resistance. At this point, it certainly looks as if we are going to try to break out to the upside and given enough time it is possible that we could see an explosive move. One of the main reasons for this is that the US dollar itself has been struggling, so I certainly think that the British pound will probably take advantage of that given enough time.
To the downside, the 1.37 level is massive support, right as the 50 and the 200 day EMA indicators are sitting there. Because of this, I think that the market will continue to look it dips favorably in the vein of value, and traders will continue to pick them up as they occur. If we were to break down below the 1.37 handle, then it is possible that we could go looking towards 1.36 handle, but right now it seems less likely than ever. In fact, you can almost make an argument for a bit of a bullish flag be informed, but at the very least you could make a rectangle argument. If we break above the top of the rectangle, then it is likely that we go much higher.
Clearing the 1.40 level would be a “buy-and-hold” scenario, sending this market much higher over the longer term. I do think that eventually where we are going, but we have a lot of work to do before we can contemplate that type of situation. Because of this, the market is going to continue to be noisy, but I still think it favors the upside over everything else. Any short-term pullback at this point in time I will be looking for short-term charts to show signs of a bounce that I can take advantage of. However, if we were to break down below the 1.35 handle, it is likely that we would see a major meltdown in this pair, sending this market much lower and at that point in time I would have to be very aggressive. Ultimately, this is a market that I think continues to be very noisy, but I think we are going to see the same thing across-the-board when it comes to the US dollar, as the Forex world seems to be paying more attention to the greenback than anything else.
