Short-term pullback should be buying opportunities at this point, and although I suggested yesterday that there was a slight opportunity for a pullback to be a little bit more substantial, it is obviously passed. Ultimately, I think at this point in time it’s likely to be a situation where the 1.30 level will be targeted over the next couple of weeks, although it does not necessarily mean that we go straight up in the air. After all, the Federal Reserve did promise more rate hikes, but at the same time we have the employment situation in Great Britain causing a lot of upward pressure on inflation as well. In other words, central banks went from “racing to the bottom” to reaching higher.
The 1.2550 level underneath is now the floor in the market, but I would be the first person to admit that this is a very bullish market and it looks like we are ready to go much higher. With that being the case, we have to look at this through the prism of bullish pressure, therefore there’s no way for me to short this market anytime soon. In fact, we would have to break down below the 1.2350 level underneath, which is something that we are light years away from seeing.
Looking at the chart, it looks as if the momentum is starting to pick up yet again, and momentum is something that you have to pay close attention to in the markets. With this, I like “buying on the dip” in order to pick up cheap British pounds.
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