- The British pound plunged against the Swiss franc initially on Friday as we have seen a massive amount of risk appetite coming out of the market after the Israelis hit the Iranian mainland in a military attack.
- So obviously everybody ran for safety in the form of safety currencies such as the Swiss franc.
- But we have seen a complete turnaround in the British pound against the Swiss Franc pair, and we have formed a wicked looking hammer.
This tells me that the market wants to go higher because it is refusing to drop. You can say the same thing about some of the indices around the world as well, that although they had a really rough start, there’s been some real resiliency. So, in this environment, I think you probably have a scenario where the British pound continues to rally against the Swiss Franc perhaps trying to get to the 1.1 125 level where the 50 day EMA is followed by the 1.1 2 level where the 200 day EMA is.
Headline Risks Over the Weekend
That being said over the weekend we had to worry about headline risks and if we break down below the bottom of the Friday campus like that would obviously be a very negative turn of events that probably would have something to do with a headline coming out of the Middle East and at that point in time all bets are off. But as things stand right now this looks very much like a market that’s refusing to go lower. And sometimes that’s all you need to know.
What won’t the market do? And what it looks like it won’t do, at least in this environment, is stick to selling off and lower levels as the buyers continue to emerge time and time again.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.