The GBP/USD pair had a strong showing on Friday, after initially dipping down to the 1.63 handle. As we’ve seen over the last several sessions, this area has been very supportive, and on Friday it launched the market much higher. By the time the market close, the GBP/USD pair closed above the 1.64 level, bringing the 1.65 level into sight. The fact that we closed the very top of the range for the session is also encouraging, and I believe that because of this the market will in fact continue going higher without too many issues.
Short-term pullbacks would certainly be buying opportunities at this point, and the fact that we formed a three hammers in a row down at the 1.63 level has me believing that this market has found a floor at that level, and that we will not go below it anytime soon.
1.65 could lead the way to 1.70
I personally believe that the 1.65 level will be resistive, but it has been sliced through a couple of times already. Because of that, it’s not hard to imagine that the market will continue to go higher from there, and then eventually head towards the next natural resistance level, the 1.70 handle. On the longer-term charts, it certainly looks like this is a possibility, and quite frankly the uptrend has been relatively strong for some time, with the exception of this consolidation that we have seen for two months.
I will be using any short-term pullbacks to add to my position, because I believe that once we finally break out, it will in fact be very strong. That breakout could come very suddenly, so that’s why I would prefer to have a growing position over time as that way I don’t have to worry about missing out. If we get the breakout, it might be difficult to enter the market then, simply because the momentum will more than likely pick up, and therefore you would have to “Chase the trade”, something that I do not do.