The GBP/USD pair rose during the course of the day on Monday, but still remains a bit soft in my opinion as the 1.52 level should continue to be very resistive. After all, that area was previously supportive, so it should now offer equal and opposite pressure. With this, I am simply waiting to see whether or not we get a resistive candle to start selling, and at that point in time I will not hesitate to do so. I believe that this market is going to be a bit volatile on the short-term, but ultimately we are trying to break down.
The 1.50 level below is of course a large, round, psychologically significant number, and as a result there will be a lot of interest in that general vicinity. I think we will ultimately break down through there, but it may take a bit of momentum building in order to start shorting.
Selling rallies
I believe that the only thing you can do in this market is to sell rallies, as the 1.52 level should be a bit of a psychological barrier now as well. I believe that the US dollar will continue to strengthen overall, as the Federal Reserve will be forced to raise interest rates sooner rather than later. Conversely, the Bank of England has no need to raise interest rates at this point in time, and that of course will be reflected in this currency pair. Given enough time, I believe that we will break down below the 1.50 level, and then reach towards the 1.45 handle given enough pressure. I think that we will have several selling opportunities between here and there, but ultimately there will be plenty of opportunities for those of you who are patient enough to wait for signs of exhaustion after short-term rallies.
At this point in time, I don’t really have a scenario in which I am wanting to buy this pair, but I would have to rethink the entire situation if we get back above the 1.54 level.
