By FXEmpire.com
The GBP/USD pair managed to bust through the 1.57 level during the Thursday trading session, to essentially test the massive resistance area that leads all the way to the 1.58 level. This is an area that we’ve been paying extreme attention to lately, and are very interested in the next movements of this pair. It has to be said that it appears that this pair will rise over time now, and as such we are definitely thinking of buying it.
However, we need some the 1.58 level cleared on a daily close to feel confident enough to go long at this point. There is a large amount of noise in the immediate area, and this of course keeps this out of the market from the long side. As for selling, we simply do not see that opportunity at this point in time, and will not until we see the wicks of the hammers from earlier this week broken to the downside.
The British pound on the whole looks fairly solid around the markets, and against the US dollar it really shouldn’t be a surprise as the sudden “risk on trade” has come back into vogue. However, this is probably somewhat predicated upon the idea of the Federal Reserve easing monetary policy yet again. This is not confirmed yet, so obviously headlines can work against any anti-dollar plays.
If we can get above the 1.58 level, we see a move to 1.60 as almost assured and more than likely even higher. We like the idea of going long this pair at this point in time as the last major swing low is higher than the one before. This suggests that the trend is starting to change in this market, and as such we are willing to risk it on a post 1.58 close. The risk to reward ratio is fairly strong, so this of course gives us a bit more confidence as well.
On the unlikely scenario that we manage to break the bottom of the three hammers from earlier this week, we see a sell position going first to the 1.55 level, and then the 1.5250 area.
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Originally posted here
