The GBP/USD pair initially tried to rally on Tuesday, but turned around at the 1.2950 level to fall back below the 1.29 handle. However, when I look at the market over the last several sessions, it appears that there is a bit of bullish pressure in general, as we await the UK election results tomorrow. Because of this, I believe that the markets going to be relatively choppy and probably not ready to make a significant move quite yet. Because of this, expect short-term volatility and choppy conditions but I still believe in the general upward momentum. That’s not to say that we won’t or can’t pull back, it’s just that longer-term charts dictate that the 1.2750 level underneath should be massively supportive and will certainly attract a lot of attention as it was such a significant break out previously. By the time the Friday session is over, we should have a longer-term outlook for this pair. Between now and then, it will probably be very difficult.
Still buying dips
I am still buying dips in this pair, but I recognize those dips could be a bit steep. I would look to smaller positions between now and the election results as at the very least you can minimize damage that could appear suddenly. The market should continue to see a lot of speculation on the election results between now and then, so I think that keeping a cooling level head is probably the most important thing you can do in the next couple of sessions. Longer-term, I want to see this pair break above the 1.3050 level, as that would free this market to go much higher, perhaps reaching towards my longer-term target of 1.3450. However, until the election is over I would not anticipate an impulsive move.
Written by FX Empire