The question now is whether or not that major support level will hold for a longer-term move?
The British pound has pulled back a bit during the trading session on Thursday to break below the 1.32 handle. At this point, the market looks as if it is trying to show stability, and therefore it is likely that we will see plenty of interest in this market. The question now is whether or not we can take out the 1.32 level again, as getting above there could stabilize his market enough to make it go higher. On the other hand, if we break down below the last couple of candlesticks, then it may send this market much lower.
The 50 Day EMA is breaking lower, thereby putting a little bit of downward pressure on this market. If we do break above the 50 Day EMA given enough time, that could send the markets much higher to reach towards the 1.35 handle. Having said that, it is very likely that we will see a lot of noise in the meantime.
The candlestick that formed for the Thursday session is sitting on an area that could cause quite a bit of support as well as resistance if we break down below there. In other words, I believe that we are in an area of great inflection, and therefore you need to be cautious about jumping in with a huge position. The market had been in a significant downtrend for a while, so one has to respect the fact that even if it does suddenly change the overall attitude, there is still a lot to fight through. In other words, it would take quite a bit of effort to get above there.
If we were to break down below the 1.3150 level, it is likely that we go towards the 1.30 level again. Keep in mind that the 1.30 level was a major support level on longer-term charts, and therefore worth paying attention to. The question now is whether or not that major support level will hold for a longer-term move? It is very likely that we will see difficult trading ahead, so by all means build up a position somewhat slowly, at least in order to mitigate the volatility and dangers of being in that type of situation. Keep in mind that there are a lot of headlines risks out there at any given moment, so caution is a better part of valor.