The GBP/USD pair fell during the course of the session on Tuesday, testing the 1.55 level. This was an area that was previously resistive, so it should now be supportive. That’s a basic tenet of technical analysis, simply that what was once resistance should now be support. Because of this I am looking for short-term buying opportunities in this market, perhaps trying to push the British pound to the 1.58 level. I will look at the hourly and the 4 hour chart in order to find buying opportunities going forward.
The fact that we bounced back above the 1.55 level suggests that there is plenty of buying pressure underneath, and it’s more than likely going to continue to show itself in this general vicinity. I believe that the move in the British pound being as strong as it has been tells me that we are trying to completely reverse the trend in this market.
Buying dips
As I’ve been saying, I am buying dips in this marketplace, just like the one we had on Tuesday. On the 4 hour chart, there is a hammer, so you can make an argument to start buying this pair fairly soon. I believe that ultimately we will break above the 1.58 level, but it is going to take a significant amount of momentum to break out. Once we do, I think we are “free and clear” to go to the 1.60 level, and much higher than that given enough time. I think that the British pound will continue to strengthen against the US dollar, not only because of the possibility of Great Britain being a bit stronger, but the fact that the Federal Reserve may have to wait a little longer than anticipated to raise rates. Because of this, the US dollar is being beaten up a little bit, and the British pound of course makes a lot of sense as a currency to go higher. Because of this, I continue to buying, and once we get above the 1.58 level, I would continue to build massive positions to the upside. I don’t really have any interest in selling.
