The GBP/USD pair fell hard during the session on Wednesday, finding the 1.6350 level supportive though, thereby keeping the sellers somewhat in check. Because of this, I think that we are starting to see a little bit of buying come back into the marketplace, and it's only a matter time before you get that nice buy signal. However, it's also possible that we are simply going to consolidate, and that a true break out may not come anytime soon. We need to get above the 1.65 level in order to have me convinced that we have truly broken out to the upside, and are ready to continue the uptrend, and that of course might be a little bit of a tall order this late in the year.
However, I believe that supportive candles in this general vicinity, even on the short term charts could be buying opportunities for the range bound trader. The market going sideways in this general area should be a good thing, as it simply suggests that we are taking a little bit of a rest after a nice uptrend. This allows more buyers to come into the marketplace, and therefore strength in the uptrend over the longer term.
British pound still reigns supreme.
As far as I can tell, the British pound is still one of the strongest currencies out there, and as a result I'm not looking to sell it against any other currencies. The US dollar of course is going to be any different, except for the fact that the Federal Reserve is expected to taper sometime early in 2014. That is good for the US dollar, but I feel that the British pound will continue to strengthen simply because the Bank of England is probably and a very similar situation to the Federal Reserve.
Going forward, I think that we will eventually break the 1.65 handle, and had to the 1.70 level. This pair does tend to like the 500 pip intervals, so as you look at the longer-term charts you can see that they often tend to be the target.
