The GBP/USD pair fell initially during the session on Thursday, but turned back around to form a very positive candle. However, we are still well within the consolidation area that we had been in for some time, and as a result I feel that the market will essentially bang around in this area going forward. With that being the case, I think that there could be selling opportunities above on resistive candles, as the market continues to bang around in this rectangle. The 1.55 level below is massively supportive though, just as the 1.58 level above is massively resistive.
For myself, I think that the market cannot truly be bought with any type of confidence until we break above the 1.60 handle, which would signify a trend change as far as I can see. I have no interest whatsoever in buying this pair, as the US dollar is without a doubt the strongest currency in the Forex market, so quite frankly I’m just not going against the US dollar in general.
Follow the trend
I tend to follow the trend anyways, but in this particular case I think that we are just simply starting to take a bit of a break after a strong move lower. With that being the case, although I don’t necessarily think that the British pound is a bad currency, it’s hard to go is a US dollar. With that, I think it’s only a matter of time before we break down below the 1.55 handle, and then perhaps head to the 1.50 level given enough time. At that level, I would anticipate seen a lot of support in the marketplace, simply because it is a large, round, psychologically significant number.
Ultimately, there’s probably going to be massive support at the 1.5 level, so that could be the end of the downtrend. Nonetheless, I don’t see this market reversing during the holiday season anyway, so with that being the case I am going to continue to be bearish on short-term charts as the liquidity starts to evaporate from this market.
