The GBP/USD pair rose after originally falling in the Monday session. The pair reacted negatively at first to the European elections that were had over the weekend in Greece, France, and Germany. The running theme in these elections is a disdain for the austerity measures, and this would have many worried about the debt crisis again – driving them to the Dollar.
The Pound itself has been very strong lately, and the Monday session turned out to be no different as the selloff was bought up and the markets gained by the end of the day to completely fill the gap and close near the highs. This is a very bullish sign, and the 1.62 level is now being tested. The 1.61 level held as support, and the previous hammers there would have been the sign that we could see buyers stepping in. With all of this being said, it looks like the bull market in this pair is still very much alive.
The 1.60 level below is our “floor” now, and it looks as if we are going to bounce around between the 1.60 and 1.65 handles. However, the bias is certainly up, so we are only buyers of this pair at the moment. The candle certainly shows real strength, and because of this we are willing to buy a break of the highs for the Monday session that not only saw strength, but saw a gap get filled and the market keep rising after the fact – something that is a very bullish sign indeed.
The pair should continue higher as the momentum has clearly failed to change, even with all of the jitters coming out of the European Union. The 200 day exponential moving average is still well below, and the trend most decidedly up at this point. The selling of this pair would only be possible if we get a daily close below the 1.59 level, as this would show a real change of psychology. We will continue to buy breaks above the daily highs, and dips of course as they have all proven to be values.
Written by FX Empire