Forex Bulls Will Love This 1 Currency Pair

God save the Queen!

Well, her currency, at least.

It’s no secret that since April of last year, her majesty’s pound sterling has had a rough go of it. Brexit and strained euro-markets have weighed heavily upon the British pound, and over the last few months, it has resided to simply chopping sideways.

Forex – a topic we don’t often cover here – is a funny business at times, but in general, I view it like any other traded asset, subject to the same ebb-and-flow as a stock.

Because even if the underlying object being traded changes, human nature doesn’t. We (and by proxy, markets) are manipulated by two very important emotions:

Fear and greed.

So long as people continue to feel both things, markets will continue to do what they’ve been doing. And though that could be seen as a pessimistic view by some, I would argue to the contrary, as the human race’s inability to change presents traders like us with a plethora of new opportunities.

Case in point, the British Pound in terms of U.S. Dollars:

In the weekly candlestick chart above of the GBP/USD pair, you can see that the pound isn’t necessarily setting the world on fire. Yes, Brexit stress still lingers overhead, but based on what’s transpired over the last month, it appears as though the pound could be ready to start rising relative to the dollar.

In addition to a (slightly) higher low, the pound just hit the lower Bollinger Band (BB). Stochastics are low, suggesting that the pound could be oversold.

But the most important “indicator” here isn’t one at all – it’s the recent price action. The pound has been unable to rise significantly above 1.28 since mid-May, bouncing off that point of resistance several times.

Should the British pound close above the last 6 candle bodies, it might make sense to go long 0.50% above the 7-bar high (including the most recent candlestick’s high, which will close at the end of this week). It’s a few days off, I know, but after glancing at several forex pairs this morning, GBP/USD looked to be in position for an absolute eruption over the next few weeks.

If Forex isn’t your “game”, and you’d rather just stick to equities, I would recommend that at the very least, you examine currency pairs from time to time. Even if you don’t actively trade the forex markets, there’s still plenty to learn here that can be applied to your ordinary stock analysis.

Foreign currencies might not sound exciting to some folks – especially those of us who focus on high-octane tech stocks – but believe me, investors are winning hand-over-fist profits by trading them.

There’s no shame in taking a break from equities every once and a while to check out forex. In fact, with what’s going on in the markets right now, this may be the best time (in a long time, at least) to do so.

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