British pound pulls back only to find support on Wednesday

The British pound initially pulled back during the trading session on Wednesday, reaching down towards the 50 EMA on the hourly chart near the 1.4150 level. By doing so, we bounced enough to reach above the 1.42 level, and it now looks as if we will go towards the 1.43 level after that. A break above that level could send the market to the 1.45 handle later, and I think that short-term pullbacks continue to be buying opportunities that we will take advantage of. I think that the 1.4150 level underneath is going to be significant support as well, and if we can break above the 1.43 level, then we are free to go to the 1.45 level which is my longer-term target.

This pair, like many other Forex pairs, will be trading based upon risk appetite soon. That means the US and China conversation. It also will be influenced by the conversations between Brussels and London, but now it looks as if the British pound is starting to catch favor and more importantly, momentum. I believe that we continue to see buyers on dips, unless something catastrophic happens on one of those 2 fronts I mentioned previously. Currently, I look at this as a “buy the dips” type of situation, and I would do so in small positions. Eventually we will break out, but I think we have a lot of work to do before that happens.