The GBP/USD pair had a pretty stellar day when you look at how it started. The fact that the pair tried to break down, and even broke down below the bottom of the three shooting stars only to turn around and bounce is extremely impressive.
The chart attached this article has a zoomed out look to it for a reason. I wanted to show you why I didn't get excited about the shooting stars were forming at the 1.57 level. On this chart, I have two lines representing one resistance area. As you can see, the 1.57 level is the start of heavy resistance all the way to the 1.58 level. A lot of traders are not used to the concept of resistance "zones" as opposed to simple lines.
I have found over the years that the most important areas on the chart are often very thick support or resistance zones. This is because there are a lot of orders that have to be chewed through in either direction in order to break out or break down. The more important the area generally, the wider the zone will be. I believe that this general vicinity is important enough to have a 100 pip zone.
Bulls are making progress
The last couple sessions look to me like they were simple attacks on this resistance area. The fact that the Thursday session close well above the 1.57 level suggests to me that the buyers have started to make a real difference in the structural integrity of the resistance area. As you know, I have been very hesitant to sell as I sold that the lows getting higher. This had me thinking that perhaps serious pressure was building on the long side. It certainly looks like this might be true now.
However, as I mentioned before, the 1.58 level is crucial. We need to see a daily close above that level in order for me to get excited about buying. It's not that I don't think it will happen; rather I am more than willing to wait as I think this could signify a move back to the 1.63 level. In the meantime, I will be watching this pair but sitting on the sidelines.