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The GBP/USD pair rose during the session on Friday as the bounce from 1.60 got the pair moving to the positive side again. During the last summer, we saw a massive ascending triangle breakout at the 1.58 handle. Because of this, we still expect this pair to continue higher overtime, and as such are looking to buy.
The interesting thing about the 1.60 level is that it is roughly 50% of the move from the breakout at the 1.58 handle. Looking at this pair, it makes sense after all as the mathematics of the breakout suggested we were moving to the 1.63 level. We did do this, and have now retraced half of the move. This is typical of a breakout move, and as such we could be seeing the beginning of a longer-term trend higher. This could in fact be a buy-and-hold type of opportunity.
The 1.63 level is still going to be significant resistance, but if it gives way we think that the next logical place to see this pair run to would be the 1.70 handle. There is a little bit of noise at the 1.65 level, but in reality it is just that - little. The candle shape for the Friday session is somewhat neutral, but it is green and that is enough for us to consider this as a buy.
We actually are willing to buy this pair as long as it's above 1.60, and as such will do so every time it dips and shows signs of support on a short-term chart. In fact, we are even willing to go long at this point time, knowing that the risk to reward ratio is so great.
Alternately, if we break below the 1.60 handle, we think the 1.58 level will be massively supportive as it was the top of the resistance zone for the ascending triangle that sent us so high in the first place. With this in mind, we do not see a selling opportunity in this market until we get below 1.57 handle. Looking at this pair, we highly doubt that we will be selling.