British Pound Forming A Bottom?
Above is a weekly chart of the British Pound. I'll be watching this currency over the next few weeks for a possible buying opportunity.
As you can see in the above chart the British Pound has been trending higher since March 2006. Over the last 2 months the B-Pound has been selling off which in my opinion is a pullback to buy.
Notice how the Pound is sitting on its 30 week moving average. This moving average has provided excellent support and resistance for this currency many times over the last 3 years and that is why I use it.
In addition to the moving average we also have the British Pound in a time window for a cyclical low. On average this currency tends to make bottoms about every 16 weeks. I pointed out each cyclical low with red arrows.
In the lower pane is an oscillator that has done a good job at timing the lows since this uptrend began. As you can see the oscillator is in the buy zone which suggests a possible buying opportunity.
Over the last few days the British Pound has been showing strength compared to the Swiss Franc and the Euro. Keep an eye on the Pound, we may see a rally coming in the near future.
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5 comments:
Why not buy it now if the 30 week has been providing a good trendline support? Are you waiting to see if the dollar will make it through 83? What are you looking for to get confirmation of a new uptrend? Thanks.
Hi jesse,
I'm temtped to buy it now right on support where the risk is low and the reward is high...but I think I might wait until the end of the week.
What I would like to see is a tight consolidation at this 30 week average followed by a break out of the consolidation, but that might be asking for too much.
Hi Kevin,
I was wondering if you would share your thoughts on gaps. About 2 weeks ago when silver broke out I sold my slv at 12.60 figuring it would retrace and fill the gaps formed on the way up. It did and now appears to be retesting the breakout and I am long again. When I look at the daily chart for the british pound I see gaps all the way down to 193.8 and am wondering if it would be a better trading strategy to wait and see if they get filled before going long. Some people will say “all gaps don’t get filled” but in the last couple of years as I have studied the market with more of a TA eye it sure seems to me that most of the time they do fill. You may have covered this topic before but I just recently discovered your blog and enjoy it very much and would be interested to hear your opinion on this subject. Thanks.
http://stockcharts.com/h-sc/ui
Correction, sold slv at 13.60.
Hi Jesse,
Some gaps are filled while others aren't. I guess some gaps are more significant than others and those are the gaps I watch. The gaps that have large volume tend to be more significant in my opinion.
Ignore the gaps in the British pound because the currencies trade around the world so there really isn't an official open or close.
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