The GBP/USD pair continued to hover just above the 1.66 level on Wednesday, as the market looks to take a rest. The recent pullback may have scared some of the weaker hands out of the market, but in reality was something that was needed. After all, the breakout had not been retested, as the resistance hadn’t been shown to the supportive. However, now that we have hung about this area for some time, I believe that this pair has shown this to be the case.
With that, I am willing to start “dipping my toe into the water” as it were. I think this pair will find more buyers in the near-term, and with that it should go higher. I believe that the recent highs will cause a bit of resistance, but at the end of the day we are more than likely going to reach for the next natural resistance level in the form of the big round number at the 1.70 level.
Longer term strength?
This pair looks as if it will more than likely show longer-term strength. After all, the Pound has been favored recently, especially against commodity currencies. This should continue to show up in this pair, but with more of a mild move as the US dollar should continue to do fairly well also. After all, the Fed is now in the midst of tapering, which is of course always going to be positive for the Greenback.
Remember that you are trading relative strength. This isn’t a question as to whether or not the Pound or the Dollar is going to appreciate. This is about which one is going to be the stronger of the two, and although that seems to be a small distinction, it’s a crucial one.
This pair will more than likely find buyers at every dip, and I see a ton of noise and buyers below at the 1.65 level as well. Because of this, I feel fairly confident in the bullishness that is to come, and with this should see higher prices in the near term.
