The GBP/USD pair had a strong showing on Friday as the British pound got a bit of a reprieve. This may have been in response to the hearings in front of British Parliament by incoming Bank of England head Mark Carney. He stated that he was willing to go along with the current scheme of the bank of England, as opposed to radical changes the monetary policy like he had been speaking of previously. However, nothing has fundamentally changed for the British economy or the British pound and as a result this will more than likely be a nice selling opportunity.
Looking to the 1.58 area, you can see that the sellers stepped in and push price back down below the 1.58 level by the time we close of business on Friday. It looks like the 1.59 level is the top of the resistance area, and as a result it will take a move above that in order to start buying again. In the long run, it's very likely we travel down to the 1.56 level, but it will be more of a grind than a straight shot down. In other words, the easy money has already been made.
Ascending triangle from last summer
Last summer we had seen a nice ascending triangle launch this pair towards the 1.63 level. This is roughly where we are at right now, and as a result there should be quite a bit of noise in this general vicinity, and this of course will slow down the descent of this pair. However, the British economy continues to suggest that there could be a triple dip recession coming, and if that's the case there will be little to keep this pair higher.
Going forward, selling the rally is in this pair is probably going to be the most profitable strategy. More than likely, this will have to be done on shorter-term charts, but if you're quick enough and have enough patience to wait for the setups, they should happen quite a bit going forward. Alternately, if we do get above the 1.59 level on a daily close, I would be willing to start buying this pair again.