Cable managed to bounce higher on the Tuesday session as the Pound had a fairly decent day all around the Forex markets. The GBP gained against the Dollar, the Franc, and the Euro in unison, and it appears that the Pound might be a possible “safe haven” of sorts at the moment. This would make sense as the Swiss National Bank has publicly stated that they are diversifying into the Pound currently.
The 1.57 level above is resistive, and I feel that the area could be crucial going forward. I think that the Pound is mainly enjoying strength due to the problems in Europe, as money is flowing out of the continent and into the UK. The problems in Europe will certainly have a lot of large accounts concerned about storing of wealth, and leaving the Euro for a strong and independent currency next door will be a tough thing to pass up.
1.57 to 1.58
I think that even with the Pound strength, the Dollar on the whole is still going to be the currency of choice for many traders going forward. The area above, the 1.57 to 1.58 area, could be rather resistive, and on headlines this pair will more than likely be risk adverse in general. (Assuming the news flow will be negative.) The area will be one that I will watch as it looks very likely to be a good spot for sellers to come back into the fray. A daily shooting star or bearish engulfing candle will be the signal that has me selling this pair.
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However, there is always the possibility that the market continues higher. If we can get a daily close above the 1.58 level, then this pair would have to be bought. The 1.60 level beyond that would of course be resistive, so this could be a choppy bit of action at that point.
I still think selling will more than likely be the route to go, and I am much more comfortable selling than buying. An exhaustion candle just above current prices is all I am asking for in order to do so.