The British pound has rallied again during the trading session on Thursday to break above the psychologically and structurally important 1.37 handle. Because of this, it looks like the markets are going to continue to see US dollar weakness, and of course the British pound strengthen in general. That being said, the market is likely to continue finding buyers on dips as well, and that is probably the smartest way to play this market, as we have gone parabolic. That being said, the market looks as if it is overdone so what I need to see is some type of pullback in order to get involved. Quite frankly, you cannot chase the trade all the way up here.
GBP/USD Video 14.01.22
That is generally the case with the British pound overall, so keep that in mind. I would love to see some type of pullback closer to the 200 day EMA, all the way down at the 1.36 handle but I do not know if we will get it. That being said, at the very least we need to work off some of the froth in what is going to be a noisy situation. All things being equal, this is a market that I think will continue to be very bullish but obviously has a cluster that it needs to deal with between now and the 1.3850 level based upon action back in September of last year. Regardless, do not chase, it is the worst thing that you can do as a trader, as eventually gravity comes back into the picture and therefore the pullback will give you an opportunity to find value.
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