The GBP/USD pair had a volatile session on Friday as we continue to bounce around near the 1.52 level. We did break above there though, but ultimately we did not show enough follow-through in order to continue to go higher. With that, it’s probably only a matter of time before we start selling off at this area that was once supportive, and if we can break down below the bottom of the range for the session on Friday I am not hesitating to start selling, especially if we get down below the bottom of the hammer from the Thursday session. With this, the British pound would continue to soften in general, but mainly I like this trade because it goes with the pro-US dollars stance that the Forex market seems to have at the moment.
Patience
Quite frankly, you’re going to need patience to trade this market. Yes, we have had a significant bounce but after the massive selloff that we had seen recently, you have to think that there is still more bearish momentum coming and also you have to keep in mind that the significant bounce occurred just above the 1.50 level. This of course is a large, round, psychologically significant number, and probably was more or less profit taking than anything else. I think that this market will try to go back down there to test to see if we have enough support to keep the market going higher.
A break down below the 1.50 level is of course very negative overall, and should send this market looking for the 1.48 level, and then eventually the 1.45 level. On the other hand, we break above the top of the shooting star for the Friday session, we could go as high as 1.54, but I think it would be difficult to hang onto that trade so I most certainly prefer to short this market than to buy it, even if we do get that signal.
