- The British Pound initially tried to rally during the beginning of the Monday session as it tested a previous uptrend line and then failed.
- At this point, it looks like the US dollar is trying to strengthen against almost everything, but I am waiting to see what happens at the 1.3350 level against the British Pound because I think that becomes a much more interesting place to get involved, as it has been important previously.
On a Move Lower…
Anything below there could send this market down to the 200 day EMA near the 1.3127 level. Short term rallies are possible, but this is a market that’s starting to look a little bit heavy as we are forming a head and shoulders pattern. That doesn’t mean that it has to kick off, but it certainly looks like it could. And with that being the case, I am a bit negative in this market, but I’m waiting for the confirmation of the daily close below this important level in the form of 1.3350. If we do rally from here and take out the 1.35 level to the upside, then yes, I think at that point, the long side continues to be the right way.
There is a question at this point as to whether or not we are in the process of grinding sideways to work off froth, or if we have gotten that heavy. I think the next couple of candlesticks will tell us, especially as we get the Federal Reserve meeting this week that could come in and cause a lot of volatility.
I’m starting to think negatively, but right now I am still on hold waiting for my signal to start selling, or that we aren’t going anywhere anytime soon. This time of year, can be quite tough, so patience is the way forward.
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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.