The GBP/USD pair rose during the session on Tuesday, slamming into the 1.5750 level. This area has been rather resistive in the past, so I believe that this market will struggle to get above it. However, this is a nice area to watch as it is an inflection point, and that means that we will certainly see some type of decision made.
On a daily close above the 1.5750 level, I think this market will continue to go much higher, probably heading towards the 1.60 handle. However, if a resistive candle forms in this general area, I would expect a pullback to the 1.55 handle as it is the bottom of the recent consolidation area, and as a result would simply be a continuation of what we've seen for the last couple of months.
The Federal Reserve and whether or not it tapers will be the main driver overall, but right now the markets are simply trying to guess as to which direction to go, so expect a lot of volatility. I suspect that the larger money traders are coming back into the marketplace and probably placing bets right now as to where the value of the US dollars going, and I think that this marketplace will be one of the ones that it shows up in.
The next 24 hours could be huge
I believe that the next 24 hours could be relatively big in this pair, at least for the short-term trader. After all, a break above the 1.5750 level is significant as the market fell from this general vicinity before, and that should have momentum players jumping into the mix as the market would certainly pick up some steam from that point. On the other hand, if we can find some type of resistive candle in this general area, it would show that we aren't quite ready to take off yet, and short-term traders would probably start fading the rally. Nonetheless, I think this next candle is going to be interesting and as a result I will more than likely feature this pair tomorrow as well.
