In the cable pair we had a nice bullish session on Friday suggesting that the market is ready to go higher again, as the 1.60 level continues to offer significant support. This looks a bit like a market that's trying to gather enough momentum to breakout to the upside, and I fully expected to go much higher than the previous highs right around the 1.6150 level. With that being the case, the market looks like it's a solid buy, but the question then becomes a matter of timing. If we break to a fresh new high, then I am more than willing to start buying at that point. On the other hand, if we pullback and find support at the 1.60 handle, I'm even more interested in that as it gives us the ability to perhaps build up momentum for the breakout.
Ultimately, I believe that this market will find its way up to the 1.65 handle, as the next resistance area. After all, this market does tend to adhere to the 250 PIP principle, as in every 250 pips there is a certain amount of support or resistance.
Federal Reserve
The Federal Reserve continues to run the quantitative easing program at full speed, and as a result the US dollar will continue to be on the back foot against most currencies around the world. As is going to be especially true against European and British currencies as of those areas are starting to show significant improvement. With the new head of the Bank of England, we now have a new dynamic in charge of the London central bank. Because of this, the market still trying to figure out where the British are going, but it is obvious that they are not easing at this point.
That being the case, this market really only has one direction to go, and that's up. I think the 1.65 handle will offer a significant amount resistance based on the longer-term charts, but quite frankly this pair looks like it's ready to continue higher for at least the next several months.
