The GBP/USD pair fell during the majority of the session on Tuesday, breaking below the 1.60 handle. This area is a significantly large round number, so of course there was a certain amount of interest in it right away. That being the case, we feel that this market will attract buyers in this general vicinity, and as a result we should continue to see supportive action in the immediate area.
With that we believe that the market will more than likely find buyers to continue to push it higher and break the top of this candle. If we do break the top of the candle, we feel that this market will more than likely head towards the 1.6170 level, the recent highs that we have seen. It makes sense as the US dollar continues to get her, and the British pound of course will be one of the beneficiaries of this. We feel that this market will more than likely go much farther than that as well, but it could be a little bit of a sideways grind in the short term simply because of the fact that the markets are trying to catch their breath after such a hard move higher.
On the other hand, if we do manage to break down below the bottom of the hammer for the session, we feel that this market could find a little bit more weakness going forward but eventually support will come back in as we have a gap and the 1.5750 handle to worry about. Keep in mind that the Federal Reserve may or may not taper going forward in the markets are focusing on that yet again. Because of this, the value the US dollar will be thrown around quite a bit. However, the British pound seems to be in a situation where cutting interest rates and quantitative easing is more than likely going to be out of the question. Because of this, this probably going to be a little bit of a natural bid for the Pound going forward over the next several weeks.
Written by FX Empire