The GBP/USD pair fell initially during the session on Monday, but found enough support below the 1.67 handle in order to turn things back around and form a hammer. With that, I believe that this market is going to continue the uptrend, and I cannot help but notice that we are at the top of the previous consolidation area from the month of February. Because of this, this appears to be a simple “breakout and then retest” of resistance in the consolidation area, one of the most common technical analysis signals for continuation.
On a break of the top of the hammer, I would be massively bullish of the British pound. In fact, I already am for the most part, and recognize that this is an uptrend should continue going higher. With that, I believe that we will target the 1.68 handle in the short-term, and then ultimately the 1.70 handle - my longer-term target.
Buying on dips.
I believe that this market will continue to go higher, and the buying on dips will be the way to go going forward. After all, the market has been somewhat choppy, but at the end of the day the most impulsive moves have been to the upside. With that, it normally shows the underlying attitude of the market longer-term, and it really comes down to whether or not you can be patient enough to hang onto these trades.
I still believe that the 1.70 level will be targeted, and quite frankly I think that we will probably go above there. However, I recognize that the 1.70 level will of course be significantly resistive, so it’s likely that we will pullback from that area once we get there. That pullback should provide buying opportunities though, just as every pullback ultimately has done for some time in this market. Selling is something I’m not interested in right now as I believe there is a massive floor in this market at the 1.65 handle, and several obvious supportive zone between here and there. With that, I am “buy only” in this pair.
