By: DailyForex.com
The GBP/USD pair fell during the session on Monday, and fell hard. This was a bit surprising as I have been so bullish of the British pound lately, but it does still fall within the parameters of support that I have been paying attention to. The 1.60 level should be somewhat supportive based solely upon the large round number phenomenon that we see time and time again. Also, there is a hammer from the beginning of September the does in fact signify that support is in this general vicinity.
The next level would be 1.58 as it is the spot at which the ascending triangle from the summer trading months broken to the upside, sending this pair much higher. This area should naturally be supportive, and if it shows a sign of support via a hammer or some other nice-looking candle, I would not hesitate to start buying at that point.
Alternately, if the 1.57 level gives way to the sellers we could see a real breakdown in momentum as this would be a complete reversal. However, with the Bank of England sitting pat on its monetary policy, I feel that this pair should continue higher, especially considering that the Federal Reserve is loosening its monetary policy even further.
Several Levels
And as mentioned above, I am watching a couple of different levels and currently have no plans to sell this market. In fact, I am simply being as patient as possible and waiting for a nice-looking supportive candle I will base my trades upon the daily closes, as this will help weed out false starts and stops.
I have no interest in selling unless of course we close well below the 1.57 level, which would not only signify a massive shift in momentum, but would more than likely send this pair plunging much, much lower. If that happens, there will more than likely be some type of obvious headline that has the market spooked. In the meantime, I am simply sitting still and checking this chart at the end of every day for that supportive sign that can get me going long and aiming for higher highs, which I see eventually, test the 1.70 as long as this pair remains bullish.