The GBP/USD pair fell initially during the course of the session on Friday, and as a result dropped below the 1.55 handle. The area below there should be massively supportive though, and as a result we feel that the markets probably will turn back around and start going higher again. The fact that we formed a hammer of course is a bullish sign, and of course there is a significant uptrend line just below. Ultimately, the market should continue to go much higher, but in the first place we will probably aim for the 1.57 level first.
There is a lot of suggestion out there that perhaps the Bank of England will raise interest rates fairly soon, and we already know that the Federal Reserve is. However, there are questions now as to whether or not the Federal Reserve will do more than just one interest-rate hike. Because of this, there’s a little bit of doubt in the U. S. dollar when it comes to this pair, so ultimately this could be a little bit of an outlier or an anomaly as the US dollar might be the softer currency.
Buying pullbacks
I believe that the way going forward will be to simply buy short-term pullbacks in this pair. That goes with the daily hammer that informed on Friday as well, so I think that this is a nice opportunity to take advantage of what looks to be a fairly strong channel that should continue to pushes pair much higher. I think that this is a longer-term “buy-and-hold” type situation, but should going to have to be very patient. After all, there’s a lot of volatility other in the stock markets right now, so the currency markets aren’t going to be a lot different.
It is not until we break significantly below the uptrend line that I would consider looking at possible selling opportunities, and possibly even below the 1.52 level. In other words, right now I am essentially “buy only.”
