The pound may have taken a beating this week, but that only translates to a better buying opportunity in my book. Here’s what I’m looking at!
A few days ago we talked about the pound possibly finding resistance around the 1.4250 mark that also kinda served as triangle resistance for the pair.
Fast forward to today and Cable is trading about 500 pips away from the resistance area. Think that’s enough to bring back some bulls back into the game?
As you can see, the 1.3750 – 1.3800 levels are not only near a rising trend line that’s been broken since the start of 2017, but they’re also just above a previous area of interest AND the 200 SMA on the daily chart. And let’s not forget stochastic hanging out in the oversold territory!
Fundamentally, there’s reason to wait a bit before buying the pound. For starters, the U.K. GDP just printed its weakest reading since Q4 2012. Not really surprising considering the string of other disappointing news from the U.K.
PM Theresa May and her friends are also fighting tooth and nail to get Britain out of a customs union. Unfortunately, she might have a bigger battle on her hands than she thought.
Meanwhile, the dollar clobbered its counterparts following optimism in the equities markets and rising U.S. Treasury yields.
This is why I’m in no hurry to buy the pair right now. While I believe that the dollar hasn’t seen the last of its bearish moves, I also think that there might not be enough catalyst to push the pound higher against the Greenback over the next trading sessions.
If or when the pound starts getting bullish momentum again, I’ll be looking to buy at around the 200 SMA and previous resistance and maybe place my stop just below the trend line.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.