The GBP/USD pair had a remarkable session on Friday, as we had some type of flash crash on Thursday, testing the uptrend line, but we turned around almost immediately. As traders cool their nerves, we eventually saw the market break out to the upside, and reach well above the 1.30 level. We are approaching the highs that we had formed during the previous session, and now I think that the British pound is probably going to go hunting for the 1.3450 level above, which has been consolidation over the longer term. Breaking above the 1.30 level is significant, and at this point in time I still don’t know what happened on Thursday. This sudden crash probably scared a lot of people out of the market, but quite frankly I think they’re all back now.
The uptrend line holding during that massive crash of course matters to me, and I believe that the 1.29 level is the absolute “basement” of this market. Ultimately, I think that we will continue to see choppiness, but it is going to continue to be a very bullish market. I like the idea of pullbacks that find support at the 1.30 level, but if we broke out to a fresh, new high, at that point I would have to be a buyer also. The British pound is a currency that I think is currently trying to change the overall trend to the upside, and days like today go a long way and building confidence in that trend. Selling isn’t a thought, I believe that the uptrend continues as all of the moving averages are pointing to the upside, and of course the uptrend line offered so much in the way of confidence. Going forward, I believe “buy on the dips” is the way to go.
Written by FX Empire