Fall back to a major support level
The pound fell again in Thursday’s trading session, hitting the 1.40 grip. The 1.40 handle is an area that many traders will pay close attention to as it was a major resistance barrier that was recently broken.. We haven’t come back yet to fully test it again, and I think that’s what we’re doing. Because of this, I think Friday’s session will likely see an attempt to find buyers at the 1.40 handle, and so by the end of the day we might get a signal to start going long.
That being said, we could very well find this market rebounding between the 1.40 level and the 1.42 level. I think you’ll probably see a lot of range-related traders come back into play as this could be the ideal setup.
Having said that, if we were to fall below the 1.30 950 level then we might get a bit more pullback, but we also have the 50 day EMA just below and then of course the 1.3750. level would be an area that you should also take a close look at. At this point, I think you’d see a lot of support, and even though some people talk about a potential “double top” at this point, it’s just that: a potential double top. In other words, you cannot trade it as such, so you have to assume that the long term trend continues.
What I saw was a volatile consolidation area that was recently broken and now recognizes the 1.42 level as an area that is going to be difficult to break through. Hard doesn’t mean impossible, and that’s exactly how I see this market. With enough time, I would expect this market to break higher and turn to the 1.45 handle. That’s not to say we’re getting there quickly, but I certainly think selling this market is next to impossible at this point. Ultimately, I remain a “bottom buy” type trader in this market and will be watching the daily close with great interest.