The GBP/USD pair initially fell during the course of the day on Thursday, testing the 1.54 level for support. It did in fact find a down there, and now we are looking at a hammer for the session. That’s session features this hammer hanging off of the 1.55 level, which shows that there is still plenty of buying pressure underneath. With that, we believe that this market does in fact go higher given enough time. We recognize also that there is a significant amount of resistance at the 1.57 level, as well as the 1.58 level.
Whether or not we can break above there is another question altogether, but if we do that would be the beginning of a longer-term buy-and-hold type situation. The British pound seems to be strengthening against most currencies as well, and as a result we are very interested in going long of this pair every time it dips. In fact, the 1.54 level was an area that we had mentioned as potential support, and of course showed that during the session on Thursday.
Even if we fell from here, we think the buyers will return again and again, and we do think that the British pound has broken out overall. However, there is still going to be a little bit of a push back from time to time as the US dollar itself isn’t exactly weak. Ultimately, this market will sooner or later become “buy-and-hold”, but at the moment you would have to deal with a bunch of volatility. In fact, the market looks as if the trend for the next couple of years is being formed. Previously in our trading careers, we saw the British pound continue to climb again and again, and it looks like we are heading back to that dynamic.
It is not until we break down below the 1.50 level that we would consider selling for any real length of time. Because of that, this is probably one of the most bullish markets that we know of in the world right now, and will continue to focus on it.
