INDUSTRY

The British pound has pulled back slightly during the trading session on Wednesday, as we continue to see a lot of choppiness in this general vicinity. The 1.29 level seems to be a bit of a fulcrum for price, and of course the 1.30 level is massive resistance, and as a result it’s likely that we will continue to bang up against that level, but once we do break through it will shoot straight up in the air based upon the inertia that’s building up. What I do like about the bullish case for this market is that it is so historically cheap, and we obviously had a huge push higher.

Something worth paying attention to is that during the Tuesday session there was massive US dollar strength, but the British pound simply sat still. That in and of itself tells you that there is a lot of bullish pressure underneath, and therefore we should eventually get that breakout that I was looking for. The 200 day EMA underneath will offer support, and of course the possibility of a “golden cross” as the 50 day EMA is sloping higher is still obvious, and that of course is a longer-term “buy-and-hold” type of situation.

Based upon the pole of the flag, the market could very well find itself going as high as 1.38 to the upside, but I do see a significant amount of resistance near the 1.33 level as well. There is a lot of flow between the 1.30 level and the 1.33 handle, so expect massive short covering if we do break out to the upside.