The GBP/USD pair rose during the session on Monday, using the 1.65 level as support. This area was previously significant resistance, so the fact that it offered support really wasn’t that big of a surprise. On top of that, the candle is closing at the very highs of the session, so it does look like continuation would more than likely be the case. As you can see, this market has been grinding higher over the longer term, but it has been a relatively bumpy market overall. With that, we do like buying this market, but do understand that patients will be required in order to profit from it.
Short-term charts could probably be used for entries, as they may offer more value as far as that’s concerned. The 1.65 level, and the area immediately below it, should offer enough support to keep the market somewhat afloat. With that, a pullback and a short-term supportive candle would be enough to get us to start going long again.
The 1.6650 level is resistance, so breaking out above there would in fact be a strong sign, and we believe that would be the signal that the markets ready to go towards the 1.70 handle, which is ultimately our target before it’s all said and done. With that, we are bullish, but do recognize that taking this trade in small pieces might be the way to go as committing too much leverage to one position might be absolutely disastrous for the smaller trader.
Even if we did break down below the 1.65 handle, we do not believe in selling this market until we get below the 1.63 handle, as there is so much noise between the two levels. On a close below the 1.63 handle, we believe at that point time the market would head towards the 1.60 handle, although we believe that’s a relatively low probability move. With that, we are more than willing to buy on dips and continue to be bullish of the British pound as it has been so strong against most other currencies.
