The GBP/USD pair initially rose during the session on Friday, breaking above the 1.83 level at one point during the day. However, you can see that we pull back and form what looks to be essentially a perfect shooting star. What I find most interesting about this is that it is at the 50% retracement level from the most significant move down starting in February. With that, it appears that the market could sell off here, and perhaps make a move back down towards the 1.80 handle.
This is an area that had been supportive in the past, near the 1.82 handle. Because of this, it appears that the market could very well fall from here, and move towards the aforementioned 1.80 handle. A break down below there would be significant, as it would more than likely have the market heading towards the lows again. However, I see a lot of noise between here and there, so this could be a very bumpy ride, even if we do make it down there.
Australian dollar strength?
I cannot help but notice that the AUD/USD pair has printed a hammer on the weekly chart. Perhaps this chart that we are looking at in this market has more to do with the Australian dollar than the British pound. Quite often, it is a simple measure of relative strength, and the Aussie has been sold off far too much in my opinion. After all, the gold markets are starting to perk up as we have formed two hammers in a row on the weekly chart.
Nonetheless, this is a market that has a reasonable spread, and does in fact have two major currencies and it. With this, I feel that the market has a chance to offer a selling opportunity, but I am cognizant of the fact that the 1.80 level could be massively supportive. Regardless, it appears this market is ready to soften up a little bit, offering a nice short-term selling opportunity. The contrary and move of course is if we break the top of the shooting star, as the market could go to the 1.85 level as that would show a significant break of resistance.
