The GBP/USD pair fell hard during the day on Thursday, slicing through the 1.70 support region. However, there’s still plenty of support all the way down to the 1.69 level, so we do not feel it’s quite ready to be sold yet. In fact, we would be more than willing to buy a supportive candle in this region as it should send the market back to the 1.72 region. Above there, we could go as high as the 1.75 level, but right now it certainly appears that the market is stalling, and therefore running out of the massive bullish momentum that we had seen previously.
With that being said, the next couple of sessions should be rather important for the future the British pound. After all, if we can find the support, this could be a nice longer-term move in our opinion. It is summertime, so these moves tend to move a little bit slower than the rest of the year, but ultimately we think that this market will in fact return to a more positive bias. With that, we are essentially “buy only” still, but recognize the fact that we need to see some type of positive momentum soon, or we will have to throw that bias out of the window.
If we do break down below the 1.69 handle, we believe that this market will then go looking for the 1.67 handle, followed by the natural large, round, psychologically significant number and the 1.65 handle. That is a significant number when looking at the longer-term charts, but then again so is the area that we are at, leading us to believe that we could still see a significant amount of buying pressure in the near term.
Just be aware the fact that we are heading into the summer trading months, and therefore the moves could be a little bit more slow-motion than you’re used to. But we believe that the market broke out for a reason, and now that we are retesting this area the real truth will come out and we should build a make a longer-term move in one direction or the other.
