- During the trading session on Monday, we have seen the British pound go parabolic against the US dollar again, reaching above the 1.34 level before pulling back slightly.
- That being said, there’s nothing on this chart that doesn’t suggest we couldn’t continue to go higher, but I really hate chasing the trade, because unfortunately, in the past I have gotten absolutely crushed trying to do exactly this.
- After all, all it would take at this point in time where we could get some type of positive announcement to send things right back in the opposite direction.
As things stand right now, traders are betting on the fact that the United States is going to go up in a huge nuclear cloud, as markets do tend to get a little overdone at times.
Overstretched
Unfortunately, this is a market that is so far overstretched that if you are not involved in it already, you desperately needs some type of pullback in order to take advantage of “cheap British pounds.” Unfortunately, what typically will happen is that we will see an equally vicious reaction to what’s happened, because quite frankly everything is such a moving piece of the puzzle right now that it’s difficult to get a grip on exactly what could happen next.
I do think the one thing you can probably count on is an extreme amount of volatility, as people just do not know what to do with themselves right now. The market continues to see a lot of external factors that cause major issues, and as long as that is going to be the issue, I just don’t see how you can be confident with anything. After all, buying the British pound at this level is most certainly chasing the trade, and as a result the best thing you can do if you choose to get long of this market is wait for some type of pullback. That pullback could drop this pair all the way down to the 1.32 level underneath, which was a previous resistance barrier. Anything below there starts to have me questioning the overall trend.
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