The 1.33 Level now in Pound-to-Dollar X-Rate's Grasp

Pound Sterling is on margin more likely to rise than fall against the Dollar after repeated rejections to the downside, with 1.33 the next key obstacle higher.

Trading Instructor Tamar Mehr at Trade With Precision tells us he is now "slightly more bullish than bearish" when it comes to the Pound-to-Dollar pair.

The analysis comes as particularly helpful given the pair's lack of recent directionality.

Rejection at 1.30...

Mehr highlights how the exchange rate keeps being rejected time after time, by the 1.30-31 level.

Now after three stronger up-weeks, however, bearish traders may be giving up the battle to push the exchange rate below the 1.30-31 zone.

With the chart looking more bullish, Mehr shifts her focus to upside potential, saying 1.3300 is now in sight and is the next key make-or-break level above the exchange rate.

Monthly and Weekly at Odds

The weekly chart is in an uptrend and this is supporting the idea of a continuation higher above 1.3300, however, the longer-term monthly chart is still showing cable in a long-term downtrend complicating the picture slightly, although following the repeated rejection at 1.30-31 the odds have shifted to supporting more upside.

Throwback to the 1.33s

A break above the 1.3300 level would see the pair move strongly higher initially, however, as often happens after a break, a pull-back will probably follow, or 'throwback' as technical analysts call them, bringing the pair back down to 'retest' the 1.3300 level temporarily, before the uptrend higher resumes.

Mehr advocates waiting for the retest of 1.3300, before buying into the uptrend.

This is because the exchange rate is highly unlikely to significantly break back below 1.3300 and much more likely to extend higher so it is an ideal place to buy.

It is also an optimum entry level because a stop loss order, which prevents positions from losing money when they start going the wrong way, can be placed just below 1.3300, guarding against losses, and producing a trade with a low financial risk compared to the potential rewards.

Upside Targets

Although Mehr does not suggest any upside targets, the target from our own recent tech analysis is at 1.3450, where the R1 pivot is situated, which is another support and resistance level, that may prove to have the same characteristics as 1.33.

We are slightly more cautious in our analysis advocating an entry point at 1.3350.

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