Currently, the Pound is presenting some great trading opportunities.
After its recent rise over the last few weeks, it has come to a peak in the market, and now is searching for direction. Although its recent climb to the top has been aggressive, the resistance level which has held since April last year and sits around 1.6247 looks set to stay.
Current market sentiment shows that markets believe that a resolution of the debt crisis will happen before a US debt default, as US treasuries stay strong in the impending crisis. So when looking to trade the pair, expect a strong USD to take effect in the coming week if there is a resolution. Looking at the Fibonnaci levels, the 23.6 level at 1.5913 is currently looking to play a big part, and any trader should look upon it as a hard level of support that will not be easy to break. Any fall below the 23.6 level would be a strong sell signal for the market, and a bearish trend would certainly form in the marketplace, putting pressure on the pound.
Nevertheless, the current 1.6000 level is acting as a hard resistance. If the pound broke through, it would certainly spell out strongish buying signals, and might break the current head and shoulders pattern that has looked to form.
When focusing on the RSI for opportunities to enter, I would avoid it currently. Markets have shown it currently to be of little value if the pair starts trending aggressively again.
This week going forward brings strong technical trading possibilities for the pound. My current market sentiment feels that the pound will pull back from the 1.6000 mark as it rises before heading down to the 23.6 mark and ranging slightly before breaking through. However, any change in the US debt crisis could cause a dramatic swing.
Written by Alex Gurr, Currency Analyst from Blackwell Global.Publication source