The GBP/USD pair tried to rally during the session on Tuesday, but got into a bit of resistance above the 1.67 handle, so much so that we ended up running a shooting star for the session. A huge surprise though, when you look at the recent action it’s been rather choppy in this general vicinity. Nonetheless, I still believe in the longer term validity of the British pound being strong, and as a result I’m not willing to sell this market. Besides, the Monday candle was a hammer, so having said that it simply looks like we’re going to bounce around in a relatively tight range. It’s not a huge surprise really, that’s what we’ve seen quite a bit here recently, and as a result it’s not a real stretch to imagine that were going to do some more of it.
I think that the 1.65 level will continue to be a bit of a “floor” in the market, and I would be surprised that this pair drop below that level. I’d be willing to buy supportive candles all the way down there, or a break above the top of the shooting star from the Tuesday session, as I would show a breaking of significant resistance. Ultimately, I still believe that the 1.70 level will be had, it’s just going to take some time.
Much like the Euro, the Pound is probably better played against other currencies right now.
I’ve been using the EUR/USD pair as an indicator of Euro strength, and then trading the Euro against other currencies. The British pound is essentially the same situation, as although this pair is bullish overall, the US dollar is an exactly weak at the moment, so if the British pound can do fairly well against the Greenback at the moment, it makes sense that it will do even better against some of these other currencies such as the Japanese yen, or New Zealand dollar. With that, I believe that watching this pair for either the breakout to the upside, the supportive candle below, or just plain strength, should offer plenty of trading opportunities. Just do yourself a favor and don’t limit yourself to only this pair.
