The GBP/USD pair fell slightly during the session on Friday, but found support near the 1.2850 level. We formed a bit of a hammer, but quite frankly I feel that there is a significant amount of support underneath and probably even more so than what we see here. The 1.2750 underneath should be massively supportive, and with that being the case I think that the market will continue to find buyers underneath. The 1.30 level above is resistive though, so having said that I think that the area should be a nice place to start grinding sideways and consolidating. Now that we have broken out, I believe that the market will probably try to pick up momentum from that area, as once we break above the 1.30 level, the market will probably go to the 1.3450 level above, which was the top of the consolidation area that the past had seen.
On the other hand, selling could occur
If we break down below the 1.2750 level, the market will more than likely break down significantly, as it would reject the massive breakout that had recently happened. I doubt this happens, because I believe that the British pound will continue to flex its muscles longer-term, but we are in the middle of trying to change the trend and that never is a clean process. Expect volatility, but I believe that longer-term traders are looking for an opportunity to take advantage of value that comes back into the marketplace. The support underneath offers quite a bit of opportunity, and those of you who are more longer-term incline, you recognize that patience will give you an opportunity to benefit greatly from this market as it changes the overall trend for the next several years going forward.
Written by FX Empire