The GBP/USD pair initially when higher during the session on Wednesday, but as you can see sold off once we get close to the 1.6650 level. This area of course has been resistance in the past, but more importantly the Federal Reserve suggested during the session that interest rates would head to the 1% region by the time we finished the next calendar year. With that, there has been a bit more of a repricing of the value the US dollar, and as a result it strengthened against most currencies around the world. In this particular instance, we fell only down to the 1.65 level, an area that has been massively supportive and resistive in the past.
The British pound has been strong in general, so therefore I feel that this market will more than likely do better than most markets against the US dollar, and as a result I am not comfortable selling this market as there would plenty of buyers below.
Using this is a tertiary indicator
Using this pair is a tertiary indicator is something that I do quite often. Quite frankly, if the British pound is doing fairly well against the US dollar, it should do even better against most other currencies. With that in mind, I am using this more or less as an indicator at this point in time. However, I do recognize that the 1.65 level would be an excellent place to see a supportive candle in order to start buying this pair, as we could grind much higher from there. That’s the key word though, grind. This will not be a massive move higher more than likely, and as a result I feel that this market can be bought, but more importantly can be used as a tertiary indicator for other pairs. For example, buying the GBP/CHF pair might be your trade set up that you are looking at, and if you notice that the GBP/USD pair is rising at the same time, that means of the British pound itself is strong in a makes sense to go ahead and get involved in the other pair.
