The GBP/USD pair initially fell during the session on Monday, but as you can see found enough support below the 1.6650 level to turn things back around and form a hammer. This hammer of course is very positive, suggesting to me that we will head back into the previous consolidation area that was from the month of February. Because of this, I do believe that a break of the top of the hammer has the market heading towards the 1.68 level.
The 1.68 level of course will be resistive, but at the end of the day I believe that this market continues to go much higher, with the 1.70 level being the next target. I believe that there will be a significant amount resistance up there, just simply because it is a large, round, psychologically significant number that has shown quite a bit of resistance and support at several different times on the longer-term charts.
Plenty of support below.
I still believe that there’s plenty of support below. In fact, I would be more than willing to buy any type of supportive candle the Prince between here and the 1.65 handle. I believe that the 1.65 handle is essentially the “floor” of this market, and as a result it’s only a matter of time before buyers would step in if we did in fact challenge that area just as we had seven sessions or so ago.
It really isn’t until we break down below the 1.63 handle that I feel that is even remotely possible to short this pair. There is a kind of noise between the 1.65 and the 1.63 candles, and as a result I simply don’t have any type of interest in selling this market. I still believe that buying is the way to go, as the British pound is without a doubt one of the more favored currencies out of the G 10 right now. Even though the US dollar should continue to strengthen overall, I think the British pound might be the one anomaly. Pullbacks at this point time should be thought of as “value”, and traded as such.
