British pound falls during the week only to find support at Maj. level

By falling below the 1.33 level and turning around to form a hammer, that’s a very bullish sign and I think that the market is ready to turn around. While I favored the US dollar for most of the summer, I think we sold off too quickly, and may have wiped out that move already. However, we break down below the hammer, that would be a very negative sign, perhaps unwinding down to the 1.30 level quicker than most people think.

If we break above the top of the hammer, then I think we continue to grind towards the 1.3650 level above, and then perhaps even the 1.40 level after that. I don’t have any interest in trying to fight that type of move, because it would be so important. Of particular interest is that we are at the 38.2% Fibonacci retracement level, followed in importance by the structural importance of that level. I think it makes sense that we get at the very least a bit of a bounce, and if we get a calming down of geopolitical concerns, it’s likely that we will continue to go higher. A break down from here coincides quite nicely with a move to the 1.30 level, which also has the 50% Fibonacci retracement level attached to it. I think waiting for break either above or below the skin will tell you exactly where we are going next.