The GBP/USD pair fell during the majority of the session on Thursday, but found enough support down towards the 1.66 level in order to form a hammer. This hammer of course signifies that there is buying power below, and this could send the market higher. On a break above the Tuesday shooting star, I feel that this market continues to go higher, eventually heading to the 1.70 level. Because of this, I think that this is a “buy only” market, and you have to keep in mind that the 1.66 level has been significant previously as well.
I believe that the 1.66 level was the scene of a significant break out, and the fact that we have come back to this area and tested it for support suggests to me that the market is going to go higher. We have formed a hammer for the second day in a row, and the third hammer out of the last four sessions. This signifies to me that there is plenty of buying pressure below, and as a result I just don’t see a scenario in which I can become bearish of this pair. On top of that, I see the 1.65 level below has been even more supportive.
Expect choppiness going higher, but we should go higher.
I anticipate that we will continue to go higher, but it will come at a cost. There will be pullbacks from time to time, but those should be looked at as potential buying opportunities, especially on the shorter-term charts. I believe that using the shorter-term charts to enter the market is probably going to be the best way, as we should continue with a tight enough range of the daily chart to make entering off of a daily candle a bit difficult.
I believe that the 1.70 level will continue to offer a nice target for buyers, but whether or not we can get above it is a completely different question. I think so in the end, but I would anticipate that the 1.70 level would offer quite a bit of resistance at first.
