The GBP/USD pair tried to rally during the course of the session on Friday, but the 1.70 level offers resistance yet again. This area turned the market back around and formed a shooting star, and as a result it appears that the market could pull back from here. However, we recognize that this is a necessarily a selling opportunity, rather a nice opportunity to buy on a pullback as we continue to build up momentum in an attempt to breakout above the 1.70 level and continue the next leg higher. The market has been very bullish of the longer term as well, but at the end of the day though feel that the British pound will continue to be one that puts up a significant fight in this general vicinity.
A pullback to the 1.68 level would find a lot of buyers in our opinion, and we would be all over going long a supportive candle in that general vicinity. In fact, we don’t really have a scenario in which we are willing to sell the British pound, as it has been so favored by currency traders overall. The fact that it has still shown strength against the US dollar, as that currency is done fairly well, that shows just how strong the British pound is overall.
Ultimately, we do believe that this market breaks above the 1.7 handle, and heads to the 1.75 handle given enough time. Once we get above the 1.7 handle, we also believe that pullbacks will happen time and time again, and should be the best way to enter this market as we continue to climb higher over the longer term. With all that being said, we do not have any interest in shorting because of the momentum that we obviously picked up on Thursday. When you get a candle like the one you got on Thursday, that shows just how strong things really are in a market, and impulse candles like that rarely get taken out to the downside. Ultimately, we think pullbacks are just invitations to start buying again.
