The GBP/USD pair initially fell towards the 1.70 handle during the session on Monday, but as you can see absolutely exploded to the upside and broke out. The break out during the session on Monday cleared a massive resistance area from the monthly chart, and as a result the market should continue to go much higher now, probably to the 1.75 level if the longer-term charts are to be believed. The British economy is starting to pull out of recession anyway, so makes quite a bit of sense to go long at this point in time as the US GDP revision numbers were absolutely horrible last week.
With that in mind, I believe that the market should continue to be one of those that you can “by on dips”, and as a result we should see plenty of short-term traders come into push the market higher time and time again. With that, we feel the market is going to continue to be bullish, and that the 1.69 level is not only supportive, abides now the “floor” in this market, assuming that we can even get that low. In fact, would be very surprised if the market even got below the 1.70 level at this moment.
We will continue to add to the position that we are already in, as we believe pyramiding can be done over the longer term, building a massive position. Anytime this market sells off, there should be plenty of support below, and as a result looking at short-term charts might be the route to truly making large amounts of money in this market. The move to the 1.75 level won’t necessarily be overnight, but it should be rather relentless. Based upon the large move during the session, and the fact that we close towards the very top of the range suggests that the underlying pressure will in fact continue over the longer term as well. Simply put, this has been without a doubt a significant and very telling break out to the upside and above the last vestiges of resistance.
