The GBP/USD pair fell during the session on Friday, and even broke down below the 1.54 area, a spot that I figured would be supportive. Granted, I only looked at it is potentially been minor support, but the fact that was violated is something that has to be paid attention to. However, not all hope is lost for the British pound regardless of what you are looking at on the chart at the moment. After all, there is a trend line that the market seems to have paid attention to at the end of the session on Friday, and as a result there is the possibility that the bullishness holds up.
Also, you have to keep an eye on the 1.5250 level as potential support. It is significant on the longer- term charts, and therefore have to be respected. With that being the case, I'm not ready to short this market even if we do break the bottom of the Friday range, which typically would be a sell signal for me. Quite frankly, I need to see the 1.52 level get violated to the downside in order to start selling at this point.
Channel?
On the other hand, if we do bounce from here we could be simply "walking the channel" yet again as we continue higher. I believe that the British pound will continue to appreciate overall, but it must be said that the US dollar is favored at the moment against almost all currencies. With that being the case, it is difficult to go long of this market at the moment, but shorting isn't exactly going to be easy either.
If we managed to break above the 1.56 level, this would be a significant momentum breakout and thismarket could go much higher. It's funny, it was just 48 hours ago that it looked like breaking out would be a possibility. Now we have to question whether or not the uptrend is even intact. One of the most negative things that I can point out about this chart though that has me concerned about the uptrend is the fact that the recent highs hit the 50% Fibonacci retracement level from the entire large move down.
