The British pound started the trading session on Monday by pulling back slightly before showing signs of life again. The market seems to be going back and forth between the 1.24 level and the 1.25 level above, with the former offering some support. The massive candlestick on Friday looked rather ugly, but the market is still paying attention to "market memory" in this general vicinity.
Despite the market's recent activity, it is clear that it needs to make a bigger move sooner or later. If the market breaks down below the most recent swing low, near the 1.2350 level, then it could see itself drifting down towards the 200-Day EMA, which sits just below the 1.22 level. This could potentially result in further volatility, making it difficult for traders to hold onto large trades. As such, it is essential to be cautious with position sizing.
However, despite the market's volatility, it still appears that there are plenty of investors willing to get long on the British pound. Even if the market does break down, it is likely to be choppy on the way down. If the market breaks above the highs of the Friday session, it opens up the possibility of a move to the 1.2750 level. Anything above there then opens up the possibility of a much bigger move, perhaps even allowing the British pound to become more of a "buy-and-hold" asset.
Volatility keeps British pound traders still interested
The British pound has been one of the better-performing currencies in the world this year, so it would make sense for investors to be interested in it. However, with such a high level of volatility, it is important to remain cautious with position sizing and trade management. Given enough time, it is likely that buyers will return, as there is a lot of upward momentum in the market.
Overall, the British pound is likely to continue experiencing a lot of volatility in the coming days and weeks, making it difficult to hold onto large trades. It is essential to remain cautious and pay attention to market trends to ensure that you can make informed trading decisions. While the market may continue to be noisy, it is clear that there are still plenty of investors interested in the British pound, making it a potentially lucrative asset for those who are willing to take the risk.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.
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