- The British pound has rallied significantly during the trading session on Monday, as it looks like the uptrend against the Swiss franc will continue.
- This does make a lot of sense as the interest rate differential favors the British pound, especially as the Swiss National Bank cut rates recently.
- With that being the case, I think it’s only a matter of time before buyers come in to pick up every dip that occurs.
The size of the candlestick for the day of course is very important to pay attention to, and it does look very bullish at the moment. Because of this, I think momentum is building and they do think that it is probably only a matter of time before we go much higher. If and when we do go higher, I think this is a situation where we could go looking to the 1.15 level, an area that I think will continue to be important, as it is a large, round, psychologically significant figure, and it’s an area that I think a lot of people will be paying attention to due to the previous resistance that we have seen there.
All things being equal, I think this is a market that will continue to play the interest rate differential and therefore you get paid to hold onto this position. I think that is something that retail traders need to pay more attention to, because institutional traders certainly pay attention to that advantage. Ultimately, this is a market that I think eventually breaks above the 1.15 level, and goes much higher, but that doesn’t necessarily mean it has to happen right this minute.
Building a case for a massive trend change
Another thing that is going on in this pair is that we’ve recently seen the “golden cross” occur, when the 50-Day EMA breaks above the 200-Day EMA, a longer-term “buy-and-hold” type of signal. While I’m not necessarily a big fan of this technical signal, the reality is that a lot of longer-term investors do pay attention to it, and therefore bigger money is probably coming in to hold onto this pair for a much larger move. Because of this, I continue to buy dips going forward, and I do think it’s only a matter of time before this market truly takes off to the upside.
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