The GBP/USD pair bounced rather hard during the session on Monday, as the 1.46 region offered enough support to turn things back around. Ultimately, we ended up forming a candle that looks a bit like a hammer, so it would not surprise me at all to see this market continue to rally for the short-term. However, you can see that I have an orange line at the 1.48 handle, and I believe that’s about as far as this market can go before the sellers come back in and start pushing the market lower.
I believe that the market should then go to the 1.45 handle given enough time, and that is my target. I also believe that we will break down below there as well, but it will take a bit of time. I think that rallies continue to be selling opportunities, and as you will notice I have a yellow box on the chart going all the way to the 1.50 level. I believe that the entire area is a massive resistance zone, and as a result the sellers will step in sooner or later.
Selling resistive candles
I continue to sell resistive candles on rallies, especially if they fall within the yellow box. I have no interest in buying the British pound right now, at least not against the US dollar. I think that there is a significant amount resistance all the way to at least the 1.50 level as mentioned previously, but quite frankly am not even comfortable buying this pair until we get well above the 1.52 level. I do not think that will happen anytime soon, so therefore this is essentially a “sell only” pair as far as I can see.
On top of that, the Core Consumer Price Index numbers come out of the UK today, as does the vanilla flavored CPI numbers. Ultimately, that could be a market moving event, and I think it’s only a matter time before something comes in to disrupt any upward momentum in the British pound.
