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The GBP/USD pair formed a shooting star the end of the session on Monday as we approach the 1.63 handle. This was the target from the ascending triangle breakout that we saw a month ago, and it makes sense that we are starting slowdown now that we have overextended the rally, and essentially hit near that level.
We still believe that with the quantitative easing going on in the United States, this pair will continue to be bullish. However, it would make sense to see a bit of a pullback at this point. Simply put, the market has gone too far ahead of itself, and we think that a pullback is exactly what is needed to get more buyers involved in the marketplace.
We currently see the 1.60 level as a possible support zone, and as such would not hesitate to buy a supportive candle in that general vicinity. We also have to admit that a break of the shooting star from the Monday session could signal more buying as well. Nonetheless, it this market does seem a bit overextended for that, and we anticipate the pullback that will allow us to get involved at much lower prices.