• The British pound has plummeted against the Swiss Franc during trading on Thursday as we have seen a major risk off type of move.
• With this being said, I think the 1.11 level is an area that you have to pay close attention to as we have bounced from there, but we've also seen action in the past multiple times on both the resistance and the support side.
• So, it'll be interesting to see how this plays out.

This is a massive candlestick for the day. So, it does suggest that something ugly has just happened. However, we haven't broken the structural support yet. And therefore, I think you've got a situation where we could very well see a bounce.
 

The Next Big Mover

I think the next big mover will be the jobs number in America, and if we get more of a risk-on type of move after that, we could see it show itself here, although it'll be indirectly. If we break down below the 1.11 level, then we have to look at the 1.10 level as another support level, which has proven itself once or twice in the past. Either way, the interest rate differential does favor the British Pound, so if you are a longer-term trader, perhaps you hang on to this position, but with reasonable size. Size of course has a major influence on what your trades end up doing.

(Click on image to enlarge)

After all, leverage is the biggest problem most retail traders run into as they tend to get a little aggressive with it. If we turn around and break above the top of the candlestick and I don't think we do that right away, that would show a complete repudiation of the selling pressure on Thursday, and it could open up a move to the 1.14 level. And while I think that could very well happen. I think that's a story for next week or maybe even later, but in the end, I think it will happen given enough time.

More By This Author: