The GBP/USD pair has broken above the 1.2750 level, showing real strength as we have broken above the consolidation area that the market has been in since August 2016. Because of this, I believe that the market will continue to go higher, perhaps reaching towards the top of the consolidation area that we had been trading in during the majority of the beginning of 2016. Because of this, I believe that the market will reach towards the top of that range which is the 1.3450 level, and gives us a nice target.
Volatility
As we are trying to change the overall trend in my opinion, I am anticipating that we will see quite a bit of volatility in this market. I do think that pullbacks offer value, especially if we can stay above the vital 1.2750 level. That is an area that I considered to be the “floor” in the market, and if we break down below there on a daily close, I would suddenly be concerned about the uptrend. However, I think that the situation in the United Kingdom is far less severe than people have been thinking, and I believe that the situation in the European Union is far worse. In other words, I believe that we will see money flowing from the European Union to the United Kingdom going forward. This of course will put a bit of a built-in bid for the British pound, and with that, it makes sense of this market drifts higher.
If we can break above the 1.35 level, that is an area that features a significant amount of resistance based upon a massive gap. If we blew through that gap, I would anticipate that this market would go screaming to the upside. I don’t think this can happen anytime soon, but that is my longer-term blueprint for this market.
