The GBP/USD pair initially fell on Monday, as we drifted down towards the 1.31 level underneath. However, as the Americans came on board we ended up seeing the British pound explode to the upside, and break out to a fresh, new high. It looks as if the bullish run continues, and that the buyers will continue to jump into this market on dips. The US dollar continues to fall, mainly because of the lowered expectations of the Federal Reserve hiking rates, and this of course works against the value of the greenback overall. This makes the British pound a bit stronger than originally anticipated, and it does tend to inflate the value. Nonetheless, the still makes the value higher and that’s really all that matters.
I believe in buying dips in this market, and as I have stated previously, I also believe that the market is going to go looking towards the 1.3450 level above which is the beginning of significant resistance. I think short-term pullbacks are buying opportunities, and those buying opportunities will be acted upon based upon value. The 1.3150 level underneath should be supportive, as it was the previous resistance barrier. Now that we have broken above the ascending triangle, I believe that the market is ready to go much higher, and therefore I am very bullish going forward. Ultimately, this is a market that I think has turned around almost completely, and the uptrend should continue although it will be more volatile than some other pairs, because of the noise coming out of the negotiations between the United Kingdom and the European Union. Be aware of this, and keep your position size small as you add slowly on the way up if you are a buyer. If we were to break down from here, I would wait until we got below the 1.30 level to start selling.
Written by FX Empire