The recent ascent in the British Pound has lifted futures near 1.6800 in June challenging the highs from mid-February. This has been a steady climb since bottoming in July of 13′ but what I find interesting looking at the weekly chart below it appears the line in the sand is just above that level, as every time when futures have approached this price point we’ve failed. While past performance is not indicative of future results I feel scaling into bearish trade at current levels makes sense weighing risk and potential reward.
A settlement above the trend line I drew on the daily chart one should admit he/she is wrong. I have a first objective at the up sloping trend line as seen on the daily chart below that comes in near 1.6575. Another consideration is the greenback has traded lower 5 out of the last 6 days giving up 1.5% dragging prices to oversold levels. If support does hold as it did in mid-March and we get a bounce in the near term to MAs I would expect this to contribute to weakness in other crosses. To be clear I am not calling a bull market in the US dollar nor a bear market in the Pound but rather a trade to play a correction.
Weekly British Pound FX:
Daily British Pound FX:
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