The GBP/USD pair fell initially during the session on Wednesday, but as you can see found support at the 1.68 handle yet again. Because of this, we ended up forming a hammer, and that of course is a very positive sign. Because of that, we feel that this market is ready to go higher, and on a break above the top of the hammer we are buyers, expecting to see this market head to the 1.70 level first, as it was the significant support holding up the market previously.
If we can get above the 1.70 level, we think the market then heads to the 1.72 handle, and then possibly the 1.75 handle. We are still bullish of the British pound overall, but do recognize that the last couple of weeks have been brutal to say the least. Because of that, we are very encouraged by this hammer, but recognize that a move higher is in fact going to be difficult, as there is so much selling pressure the needs to be reversed in order to get to where we think we are going.
As far as selling is concerned, quite frankly we feel that if you want to sell this pair, you have missed your opportunity. The 1.67 level below looks very supportive as well, just as the 1.66 handle, and then of course the 1.65 level as it is a large, round, psychologically significant number. With that, we think that there are far too many supportive levels below to be concerned about selling at this point in time, so we are essentially in a “buy only” frame of mind, recognizing that the market should find plenty of buyers from time to time, and we believe also that as we go higher, every time the market dips there will be buyers interested in going higher as well.
Ultimately, we do believe that this pair goes back to the upside, and eventually if the 1.75 handle. Don’t get us wrong though, we recognize that it is going to take some serious work to get there.
