The British pound has gone back and forth during the trading sessions that make up the week, showing signs of confusion. This makes a lot of sense though, because we are at a major level, and it is going to take a lot of momentum to reverse the massive selloff that we had seen. Higher interest rates in America of course favor the downward momentum, but it’s not until we break down below the hammer from the previous week that I would be concerned about whether we can rally. If we can break above the top of the shooting star, then I think the market goes to the 1.3650 level fairly easily.
In the meantime, this may be more of a short-term market, offering back and forth trading for short-term traders more than anything else. I believe that the British pound is going to be influenced by headlines coming out of the negotiation between the United Kingdom and the European Union as per usual, but I also believe that the headlines around the world as far as trade is concerned could have an effect as well. If things calm down, and trade wars are avoided, it’s likely that we will continue to go higher. Geopolitical risk could come into play as well, and it’s likely that the headlines coming out rather negative could break the back of this massive hammer from the previous week. That would be a very negative sign.
GBP/USD Video 11.06.18
This article was originally posted on FX Empire