The GBP/USD pair rose on Monday as traders piled into the “risk on” trade. The market finished the New York session at the top of its recent trading range, and is now at a crossroads of sorts. The 1.57 level has been significant, and we feel there is no reason for this to change. The trend is most certainly to the downside, and this should also continue to be the case as the headwinds out there for the global economy continue to push the markets around.
It was a nice rally, but the fact that we bounced shouldn’t be a big surprise as it had sold off so hard. The market looks set to consolidate between the 1.57 and 1.53 levels for the time being, assuming that the 1.57 holds as resistance. The breaking of that level to the upside would be very bullish, but we still think there are far too many resistive points on this chart to get bullish overall. The 1.59 – 1.60 levels would come into play as possible sell points if the area gave way as well, and the fundamentals around the world still suggest a run to the Dollar is the more likely of scenarios.
If we can break below the 1.53 level, this would be a massively bearish signal and show that this pair has much farther to go to the downside. For the time being, we think that any signs of weakness at the 1.57 level should be sold.
Written by FX Empire