The GBP/USD pair fell during the session on Monday, breaking the bottom of the shooting star that had formed on Friday. While this is a negative sign, we do not believe that this pair will do more than pullback at this point in time. That being the case, we believe that the 1.5950 level should continue to offer support, and as a result we are actually waiting to see this market fall down to that level in order to start buying. If we get that opportunity, we think that buying should be the only way to go going forward.
On the other hand, with the nonfarm payroll number coming out later today, we could possibly see the market break higher and smash through the top of the shooting star. That being the case, we would certainly be buying at that point time as it would show a real strength underlying the buyers in this marketplace. At that point time, we think that this market would more than likely head towards 1.65 handle first, and then possibly even higher. The 1.65 level of course is a large round number, so we figure that the market will target that if we can get above this resistance that we see just above current pricing.
However, this will be predicated mainly upon the jobs number, and whether or not the US employment situation is getting better or worse. If it is getting worse, the Federal Reserve will not be able to lay off of quantitative easing anytime, and that of course is more than likely going to be very negative for the US dollar. And then scenario, we would expect this pair to go higher, possibly much higher if the number is that poor.
It is not until we break well below the 1.59 handle that we feel this market can be short it. Below there, we would be breaking the gap from early September, and at that point time we think that the upward momentum would be completely broken. That of course is going to take a very strong jobs number though, something we do not expect to see.
Written by FX Empire