The GBP/USD pair fell during the balance of the session on Tuesday, but as you can see found the 1.60 level to be supportive enough to send the market higher and form a nice looking hammer. This hammer of course suggests that the market will find buyers at the 1.60 handle yet again, and because of this we feel that the markets will continue higher, possibly to the 1.63 handle, and probably even beyond that. That being the case, we feel that this market should go higher and ultimately will be one that we want to buy on the dips. Because of this, we feel that this market is probably one that cannot be shorting, and we fully expect the 1.60 handle to be supportive enough to negate any type of selling.
Going forward, we fully expect the British pound continue to gain against the US dollar, as most currencies will. After all, the Federal Reserve looks like it’s ready to continue quantitative easing for roughly the end of time, and because of this it’s going to be difficult to imagine a scenario where the US dollar would gain overall.
The market should continue to be supported at the 1.60 handle, but the possibility of breaking down does still exist of course, as the 1.5750 level should be supportive as well. In fact, it’s quite likely that the market will try to get down to that level if we do break below 1.60, which does create a short-term selling opportunity. However, we still believe that in the longer-term scenarios, this pair goes higher over time. With that being the case, we feel that this market is going to be one that we buy on any type of dip, and probably continue to do so until we hit at least the 1.65 handle, and possibly even higher because of the way things have reacted. Buying the US dollar is something that we don’t like glandular right now, especially against European currencies and the British pound of course is without a doubt one of the stronger ones out there currently.
Written by FX Empire