The GBP/USD pair bounced during the session on Friday, breaking the top of the hammer from the Thursday session. The hammer on Thursday give us a little bit of a “heads up” on what was going to happen on Friday, as the jobs number out of America was actually better than anticipated. By all accounts, that should have driven the value the US dollar higher. However, that was not the case in various Forex pairs, this one of course being the same.
With that, it looks like we are going to have a significant bounce from here, and the 1.50 level of course is a perfect place to see that bounce. After all, it’s difficult to imagine a more significant number than 1.50, save perhaps 1.00 or 2.00 as far as Forex trading is concerned. With that, it makes sense there’s a lot of buying pressure here, plus on top of that there is a significant amount of support in this area on the longer-term charts as well.
Trend change? If so, it’s going to be noisy.
I personally believe that the so-called “smart money” is starting to build up small positions in the British pound. I think that we are nearing a trend change, but remember that trend changes tend to be very noisy and messy affairs. After all, you have to give the entire market to suddenly change its mind. Because of that, the very rarely happen immediately, and as a result I believe that we will have plenty of choppiness going forward. However, we do have a classic buy signal as far as technical analysis is concerned, so I think we will probably go to the 1.53 level first.
Down there the real fight is at the 1.55 handle, and if we can break above there on a daily close, I think the trend is starting to change. If we did break down below the 1.50 handle, that’s not necessarily the meltdown waiting to happen, as I see significant support all the way down to the 1.48 level. On a daily close below that level however… Things could get very ugly.
