The GBP/USD pair initially fell during the session on Wednesday, but found enough momentum to the upside to break above the 1.48 handle. This of course is a significant breakout in terms of the beginning of the pattern, but at the end of the day we still see a significant amount of resistance all the way to the 1.50 handle. With that in mind, we are not interested in buying this pair quite yet, as we think there is a significant amount of resistance above. We will look for resistive candles until we get well above the 1.50 level, something that isn’t going to happen anytime soon. With that, we are neutral at the moment, but do recognize that sooner or later we will have to make some type of decision. A resistant candle within the yellow box on the chart is reason enough to start shorting as far as we can see, and again, it’s not until we get well above the 1.52 level that we would consider buying. That’s something that’s going to take several days to happen even if it could, so at this point time we remain bearish overall.
The general attitude of the markets has been a little bit skittish during the day on Wednesday, in the US dollar was sold off in general. While this is considered to be a good risk appetite sign, the truth of the matter is nothing has changed. This could just simply be people taking profits, or perhaps some type of short-term knee-jerk reaction that will eventually be nothing more than a blip on the radar. By looking at the longer-term trend, you can see that we are most certainly bearish in this pair, so really there’s no need to fight that. Simply look for selling opportunities as it goes with the overall weight of the market. Ultimately, if we do form a resistive candle we will be aiming for the 1.46 level yet again. Below there, we then fall to the 1.40 handle over the longer term as a significant target.