To learn more click here
The GBP/USD pair attempted to smash through the 1.57 level on Monday, but was turned around and form a shooting star. Normally, this would have us very bearish of a currency pair, but as you can see on this chart the lows keep getting higher. This suggests to us that there is a significant amount of pressure to the upside in this marketplace, and as such we don't feel comfortable shorting it.
Granted, it does look like a nice shorting opportunity at first glance. Perhaps we will see a fall to the 1.56 level, but in the end it just simply seems too difficult to sell the British pound at this moment in time. We still stand by the idea that the 1.58 level is the gateway to much higher prices, and as such that's essentially what we are waiting for.
We think the 1.55 will offer massive support, and if that level gives way then we are willing to think about selling the cable pair. Until then though, it looks like any move to the downside will be very choppy and very susceptible the spikes in price. Because of this, we just simply cannot be comfortable at this moment in time.
It should be noted however, that the 1.58 level should give wait for a move to 1.6 without too much hassle. Once we get out there, we will more than likely see prices as high as 1.62 or even 1.63 and relatively short order. We are approaching the end of the summertime, so we could see that move relatively soon.
Speaking of the summer, these moves do have to be taken with a bit of a grain of salt. The reason being is that the liquidity is low, and as such as a little easier to move the markets around at times. The main traders for trading desks around the world are more concerned about the beaches in Monaco or even the Seychelles instead of what's going on in their offices in London. With this in mind, we are more than willing to be patient and give the market a couple of weeks to show it's true colors.