The GBP/USD pair initially fell during the course of the session on Monday, but found enough support at the 1.55 level to turn things back around and form a nice-looking hammer. With that, it appears that the market is ready to continue going higher and as a result we are most certainly buyers. We believe that pullbacks will continue to be buying opportunities, and that buyers will reemerge every time we pullback. However, we believe that the 1.58 level remains pretty significant as far as resistance is concerned, so we think the upside is somewhat limited in the short-term. Ultimately though, we believe that the British pound should continue to go much higher.
We believe that this market cannot be sold, simply because the British pound seems to be one of the best performing currencies in the world right now. Granted, it tends to do better against other currencies than the US dollar, but we also believe that this is simply a measurement of the overall strength of the currency itself, the British pound.
We believe that the market will eventually break out above the 1.58 level, and then head to the 1.60 level. We believe that this market not only goes to the 1.60 level, but goes much higher. We believe that the longer-term buy-and-hold mentality has come back and as a result we are not interested in selling, at least until we get well below the 1.52 handle. If we get below there, we believe that the market will then head down to the 1.50 level given enough time.
If we got below there, we believe that the market will then have completely broken and turned around. However, we have a hard time believing that’s going to happen anytime soon, so at that point in time we find ourselves as “buy only” because it would take so much to break this pair down at this point. The US dollar of course has been very strong, but this might be the one anomaly in the currency markets that offers a way to sell the greenback.
