The GBP/USD pair initially rallied during the session on Tuesday, but failed to hang onto gains and formed a shooting star. On Monday, we had formed a hammer, so this suggests quite a bit of indecisiveness to us. With that being said, we think that a pullback could come, but we also expect that a lot of bullishness could remain in this marketplace.
It should be noted that the 1.58 level offered quite a significant bounce, and based upon the reaction it looks as if the market wants to return to the 1.63 level. With that in mind, we are buying supportive candles and breakouts above them. We need to see some type of “basing process”, and order to start a move to the upside with any type of regularity. This could be what’s going on, and will often involve choppy and tight markets. Because of this, we are staying of this market unless we break the highs of the shooting star from Tuesday, or get some type of supportive candle at a lower cluster such as 1.59 or so.
Written by FX Empire