The GBP/USD pair broke out during the session on Thursday, clearing the 1.70 level. That being the case, the market looks as if it’s ready to continue going higher, and this level giving way is a massively bullish sign as far as we are concerned. The 1.70 level is obviously a massive big round figure, which of course will attract a lot of market participants. Ultimately, we feel that this market will continue to go as high to the 1.75 level given enough time.
If you look at the reasons action, it appears that the market simply has been trained time and time again to breakout to the upside. This underlying momentum should continue to propel the market higher, and we are in “buy only” mode at this point in time. This market ultimately should be one that you can buy on dips, probably using short-term charts as the way to get involved.
Granted, we did pull back a little bit towards the end of the day, but at the end of the session we are certainly positive looking. A pullback to the 1.70 level should find plenty of support, and as a result we would be buyers down there on supportive candles as well. In fact, that would be a classic “breakout, followed by pullback to check former resistance as future support” type of move that we see over and over again.
As far selling is concerned, we have no interest in doing so as the British pound looks so healthy. In fact, the British pound looks good against most currencies, and this chart is essentially just a harbinger of things to come in our opinion. For the short term, the British pound should continue to be favored overall, and as a result we have no interest in selling it against anything at the moment. Because of this, we believe that it will take a pretty significant move lower to start selling, probably a move down below the 1.68 handle, something that we just do not see happening anytime soon. In fact, we believe that the British pound should continue to be healthy and strong for most of the summer.
