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The GBP/USD pair rose during the session on Wednesday after initially falling. At the end of the session though, we gave up some of the gains in this pair as well. The 1.59 level still looks very resistive, and as such it appears that more consolidation and "churning" needs to be done in order to push this pair much higher.
Over the summer months, we did form a nice ascending triangle that recently broke out. The resistance for the triangle was between the 1.57 and 1.58 handles, and once we broke above that there should have been very little doubt as to the bullishness of this pair. However, we really haven't got much of a lift afterwards.
It is likely that one of the things working against the bullishness of this pair is the simple fact that there is so much uneasiness out there. Because of this, there will be a natural inclination for traders to bid up the US dollar, and perhaps step away from currencies that are exposed to Europe like the British pound.
However, from a technical standpoint this pair measured a move up to the 1.63 level based upon the triangle. This sets up a fairly easy trade, if you are patient. We still believe in the bullishness of this pair, and would buy pullbacks as they come. In fact, we think that the 1.58 level will continue to hold as support even though we see 1.59 giving the pair so much trouble.
We think that a break above the Wednesday highs is also a nice buy signal as well, and as such we think this pair will eventually give us that move in order to continue up to the 1.63 level. As for selling this pair, we are deathly 19 of doing so but would have to admit defeat on the part of the buyers if we can close below the 1.5650 level. This in fact would show a massive momentum swing to the downside, and we would at that point in time be more than willing to short this pair hand over fist.