The GBP/USD pair fell initially during the day on Friday, but turned back around to form a rather positive candle. By doing so, looks as if the market is ready to continue going further to the upside, and a break out above the 1.57 level should be coming. If and when we get it, this market should then head towards the 1.58 level which of course is massively resistive. We believe that buying this market on a break above the 1.57 level is the only thing to do at the moment, or perhaps buying on pullbacks and show signs of support near the 1.55 handle as we have so many reasons to think that the support should stay in place.
Ultimately, we like the idea that the uptrend line is just below the 1.55 level which of course should be supportive based upon the fact that it is a large, round, psychologically significant number. Beyond that, we see the 100 day exponential moving average just below as well, which of course is a moving average that a lot of longer-term traders will follow. Because of this, a lot of “big money” finds itself in these areas. The uptrend line, the exponential moving average, and of course a large, round, psychologically significant number all add up to a significant amount of support. Down there, we also have consolidation that is obvious, so at this point in time we are very bullish.
The British pound itself has done fairly well against most currencies around the world, and of course has at least held its own against the US dollar. As the US dollar is beating up on most other currencies at the moment, this of course is a very bullish sign. We believe this market goes higher, but quite frankly you may have to hang onto quite a bit of volatility before we get to where we are eventually going to go. Regardless, we have no interest whatsoever in selling this market as long as we are above the uptrend line as it is the definition of an uptrend.