The GBP/USD pair initially fell during the session on Tuesday, but once we got below the 1.52 level we found plenty of buyers in order to turn this market back around. Ultimately, we closed at the highs of the session, well above the 1.53 handle. However, we are starting to run into a significant amount of noise, which I think extends all the way to the 1.55 region. I think that it’s only a matter of time before we get there, but I have to understand and keep in mind that the Federal Reserve is speaking today, and that could have a massive effect on all currency pairs that involve the USD.
It would not surprise me at all to see a resistive candle between here and the 1.55 level, and most especially at the actual 1.55 level itself. On top of that noise that I see, there is a Fibonacci level (38.2 %) that appears just above the 1.55 handle. With this, I think that the bullish move in the British pound is starting to get a bit “long in the tooth”, and as a result don’t really want to buy this pair right now. Quite frankly, I have missed the move.
Resistive candles on daily charts
What I want to see is a resistive candle on daily charts that I can start shorting. I think that I will more than likely get that opportunity, but ultimately it’s going to be a trade that I need to take much care in, as there is the possibility of getting absolutely blown out. I think that the 1.55 region is so important that quite frankly if we make a new high, I believe the trend has changed and the GBP/USD pair essentially has become a “buy-and-hold” type of situation.
I am not going to place a trade in this market until I get the daily candle, because quite frankly I think there will be a lot of volatility late in the day as the announcement is in the afternoon during US trading. I want to let the market do its thing, and that I will simply follow what it tells me.
