The GBP/USD pair initially fell during the session on Tuesday, but found enough support below in order to turn things back around and form a hammer yet again. We have been bullish of this pair for some time now, and that most certainly has not changed after the Tuesday session. The market broke out above the 1.70 level some time ago, and that being the case we feel that the market should eventually find enough upward momentum to continue going higher. Ultimately, we think that the market should go to the 1.75 level given enough time, and perhaps offering plenty of “buy on the dips” type of market between here and there.
We believe that the 1.70 level is supportive enough the market higher, and we also believe that the support level extends all the way down to the 1.69 handle. Because of this, we are not interested in selling until we get below the aforementioned 1.69 level, something that doesn’t look very likely at this point in time considering how strong British pound has been against most currencies around the world.
Ultimately, we do believe that the 1.75 level is a longer-term target is market, so we obviously will continue to buy time and time again. We see no reason to sell whatsoever, and believe the fact that the British economy looks to be coming out of recession will continue to be the focus of trading when it comes to the cable market. We believe that the action that we have seen over the last four or five sessions has simply been in reaction to a marketplace that is trying to build up enough momentum to break out to the upside yet again. After all, the move to this area had been rather impulsive and bullish, on a couple of different occasions. We believe that will happen again, but do not know if it’s going to happen today, tomorrow, or next week. Nonetheless, we do anticipate that move, and once we break above the 1.72 level, we think that the 1.75 level will be next.
