The GBP/USD pair bounce slightly during the session on Friday, as the market took a little bit of a breather from the extreme dollar bullishness. With that being the case, we could very easily bounce back to the 1.60 level which is an area that was significantly supportive in the past. It’s also a large, round, psychologically significant number and as a result there should be a bit of order flow there. With that being the case I feel that letting the market rally a little bit will more than likely offer “value” in the US dollar, which in turn should offer plenty of trading opportunities.
I believe that the market looks set to break down below the 1.58 level, and then eventually hit the 1.55 level that is a large, round number of course, and it is an area that has been of interest over the last several years’ time and time again. If we can break down below there, I think at that point time we probably head to the 1.52 level, and then the 1.50 handle.
Continued bearishness
Clearly, after the recent bank of England interest-rate decision and the Federal Reserve stepping away from quantitative easing, this market only has one direction to go. It doesn’t matter though, the market should continue to offer it doesn’t matter though, the market should continue to offer selling opportunity after selling opportunity. After all, there is most certainly a reason why we are falling apart, as the US dollar is the most favored currencies around the world. I originally had thought that perhaps the British pound might be a little bit of an outlier, but it appears now that even the United Kingdom will be prone to losing value against the US dollar.
I believe that the 1.62 level needs to be broken to the upside in order for the market be one that can be bought, and until that happens it’s going to be almost impossible to go long. I believe that short-term setups will continue to be favored as we sell hints of weakness every time we rally.
