British Pound Futures Just Hit a 3-Month Low. Here's How to Play It.

The daily chart for December British pound futures (B6Z26) shows that prices are trending down and have just hit a three-month low. Bears have the near-term technical advantage as the trend is their friend.

Fundamentally, a tighter U.S. monetary policy from the Federal Reserve has made the U.S. dollar index very strong in the foreign exchange market. The Fed raised interest rates recently and is expected to raise again before the end of the year. Meanwhile, the U.S. economy remains resilient, as seen by recent data.

A move in the December pound futures below chart support at last week’s low of 1.3211 would give the bears more power, and it would also become a selling opportunity. The downside price objective would be 1.2850 or below. Technical resistance, for which to place a protective buy stop just above, is located at 1.3350.

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 

1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.