GBP/USD Daily Outlook- May 5, 2014

Christopher Lewis

The GBP/USD pair fell during most of the session on Friday, but found enough support at the 1.68 handle to turn things back around and form a hammer. This area was a significant area of consolidation during the last couple of weeks, so it’s not a big surprise. After all, the nonfarm payroll numbers, although having a strong headline number, really didn’t show a lot of strength underlying that number. The majority of the job gains were again from people leaving the workplace, not exactly a sign of economic strength.

The fact that the market formed a hammer suggests that we are continuing to go higher eventually, and the 1.69 level will get broken above. If we get that, I feel that the market will make its move towards a 1.70 level, an area that I have been targeting for some time. The British pound has been a bit stronger as of late, and with the US dollar looking little bit suspicious, it’s not a big surprise we see that move.

Buying on the dips.

I suspect that there will be a lot of short-term traders out there buying on the dips in this market as it certainly is in an uptrend. Ready, it’s been a bit choppy from time to time, but ultimately it’s been very reliable since we broke through the 1.65 handle. I believe that the market probably won’t see a 1.65 print anytime soon, but that would be the ultimate “floor” in this market. In other words, I am not willing to sell this market until we get well below that level, something that I do not anticipate seen anytime soon.

Having said that, I believe that the 1.70 level will more than likely offer a bit of resistance though, so pullback from that area might bring in people looking for value as the British pound would be cheap at that point. I do think that ultimately we break above the 1.70 handle, and continue much higher. Nonetheless though, that will be a significant fight in my opinion.

GBPUSD Daily 5514

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.