The British pound has initially fallen during the week but then found enough support below the 1.30 level to turn around and rally significantly. It is a very volatile time for the British pound, as there were a lot of decisions and questions about whether or not the Bank of England would cut rates. They chose not to, which of course is bullish for the currency and we now look as if we are ready to take on serious resistance just above. If the market does break the next couple of wicks going back a couple of weeks, it looks as if it is ready to go looking towards the 1.35 handle over the longer term. With that in mind, dips should continue to offer buying opportunities, but obviously there will be a lot of noise out there when it comes to the British pound with Brexit going on and Great Britain officially leaving the EU this week.
If the market can break above the 1.35 handle, it’s very likely that it will then go looking towards the 1.38 level, followed by the 1.40 level above. Because of this, we could be looking at a longer-term play if you can keep the leverage low enough. Ultimately, I like buying dips going forward, and I also believe that we are in the midst of a major trend change. This will be especially true the Federal Reserve does end up being as dovish as some people are starting to speculate now.
This article was originally posted on FX Empire
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