British pound rallies on Thursday in rare sign of strength

The British pound bounced a bit during the day on Thursday, reaching towards 1.34 handle. I think there is significant resistance extending to the 1.35 handle, and of course the previous uptrend. At this point, I am simply waiting for signs of exhaustion that I can start selling, to take advantage of what has been an ongoing downtrend. I have no interest in buying this market anytime soon, and I think that the rallies will offer value in the US dollar, something that I think will continue to be the theme most of the summer, selling European currencies in general.

I think that the market breaking above the 1.36 level would change things obviously, because we will have cleared a lot of resistance. However, I don’t think that happens anytime soon, and I believe that we are much more likely to go looking towards 1.30 level underneath over the next couple of weeks. With this in mind, I’m looking for some type of exhaustive candle to start selling, and I believe that we should get that somewhere in the next 100 pips as it is so noisy and there is a great confluence of bearish pressure.

If we did break out, the market could go as high as the 1.40 level, but that seems to be very unlikely at this point, unless of course the Federal Reserve changes its overall attitude as far as interest rates are concerned.

GBP/USD Video 25.05.18