The GBP/USD pair had a slightly negative session on Monday, but only after bouncing significantly from the 1.63 handle. This move produced a hammer, which of course is a very positive sign, and I do believe that the British pound continues to strengthen overall. The fact that he can rise against the US dollar shows me just how strong the British pound is in general, and therefore I feel that this pair is one that’s worth watching whether or not you trade this actual market. After all, if the British pound as well get the US dollar, it certainly can do very well against the Japanese yen or the Swiss franc, for example.
The market is currently sitting in the middle of a big massive noisy area from late November or early December, and as a result this hammer suggests that the buyers are starting to step back into the marketplace in order to go higher. The 1.65 level should offer a bit of resistance, but ultimately I think this market will get above there. In fact, I fully expect this market to go to the 1.70 level before it’s all said and done.
Nonfarm payroll numbers
Remember that the nonfarm payroll numbers will greatly influence what happens with the US dollar. That could slow this pair down, as a strong jobs number out of America of course can help the value the greenback. However, I still believe that the uptrend is firmly in place in this marketplace, and as a result the market should continue to go higher.
Because of all of this, I am one of those people that will tell you to “buy on the dips” when it comes to this pair. This hammer suggest one of those times may be happening right now, and a break higher of course has me very interested in being long of this pair yet again. However, keep in mind that the area just above will cause a lot of choppiness, so you must be patient if you are involved.