The GBP/USD pair fell initially during the session on Tuesday, but just as we had seen this pair to during the Monday session, we ended up bouncing and forming a nice-looking hammer. This is the third hammer and four sessions, and as a result I believe even more now that there are buyers below that will pick this pair up. Once we get that move, we will probably head to the 1.5350 level, and then possibly as high as the 1.55 handle over the next several sessions.
In order to take his position though, I need to see the market break the top of the hammer from both of the past two sessions. Once we get that move, I don’t see any reason why the buyers will take over. On top of that, you have to ask whether or not this market hasn’t bottomed at this point. That being the case, it will more than likely be very volatile going forward, but ultimately we will break out to the upside in my opinion.
Massive support
I believe that there is massive support just below, at the 1.50 handle. Not only that, the area has support all the way down to the 1.48 handle, meaning that it is massively supportive. In other words, I feel pretty confident that the buyers are going to step in and pick this thing out and perhaps even driving much higher.
There have been murmurs of people in the Federal Reserve suggesting that raising rates during the year 2015 is probably the wrong thing to do. As those voices get louder, a very possibly could drive the value the US dollar lower. I don’t anticipate seeing that anytime soon, but it is something that is in the back of my mind right now. Nonetheless, I think that the technical analysis screams that we are about to have a bounce. Whether we can get above the 1.55 level of course is a real challenge, but once we get above there and perhaps even as high as 1.57, we could see a trend change.
