The GBP/USD pair initially rose during the session on Wednesday as we broke above the 1.61 handle for the second day in a row. However, just like the previous session we solve the market failed to hang onto gains above that level. This looks like weakness rolling into the market, and perhaps the buyers are starting run out of steam. This wouldn't really surprise me, as there are plenty of headline risks out there right now that could move the currency markets.
I still think this pair is a strong and bullish one, but as we get towards the end of December there will be less and less liquidity. This could lead to a row a currency moves in all pairs, not just this one. I think that the two shooting stars in a row suggest that we will pullback but we should see plenty of support at the 1.60 level.
Multiple support levels
I see support not only of the 1.60 level, but also that the 1.58 level. In fact, I think the 1.58 level is significant support on the longer-term charts as well. This is why I think as long as we or over that level, it is going to be very difficult to short this pair.
I still believe that next year we will see the 1.70 print in this currency pair that I suggested, but the move will not be in one quick burst. I think that the 1.61 level will eventually be overcome, as we march towards the 1.63 level in the short run. However, we have seen quite a bit of strength over the last couple of weeks, so it makes sense that we pullback.
I do since though that anytime we pullback in this currency market will represent a buying opportunity. Because of this, I think that any supportive looking candle below should be a chance to add to my already long position. In fact, I am hoping to build a massive position over the long run in order to take advantage of what I think will be a longer-term trend.