Any trade to take between now and the end of the day on Wednesday is essentially gambling on a coin flip.
The British pound fell towards the 1.3450 level again on Tuesday as we continue to question whether or not we are breaking out or breaking down. After all, the market has seen a nice pullback, but at this point it is difficult to imagine where we will next due to the fact that we have the FOMC meeting happening during the Wednesday session. If we can break above the top of the candlestick, that is a bullish sign, but this will come down to what Jerome Powell has to say more than anything else.
It is not until the end of the day that I think we will have any type of clarity, because we will have digested everything that Jerome Powell had to say, whether or not he sounded just as hawkish as he has recently, and whether or not the Federal Reserve is suggesting that they are going to balk at the idea of tightening. If they do, that should send the British pound much higher. If they continue to be hawkish, that will work against the value of anything that is not named “USD.” Ultimately, I think by the end of the day we should have some clarity and I will not put money to work between now and then. Any trade to take between now and the end of the day on Wednesday is essentially gambling on a coin flip.
Looking at the chart, it is very likely that we will continue to see noise in this general vicinity because not only is the 1.35 level important, but we are also stuck between the 200 day EMA and the 50 day EMA, typically an area with a lot of volatility. Given enough time, I expect to see some type of larger move, and I will simply follow it when it shows up. That being said, we are trying to see whether or not we get clarity and we can put money to work. Regardless, I would start out with a relatively small position and just simply follow through by a bigger position as I build. If we break to the upside, the 1.40 level is your target, just as the 1.32 level could be your target if we do get a breakdown.