The British pound has spiked all the way to the 1.35 handle but has since pulled back quite significantly. That being said, there should be plenty of buyers underneath and a lot of people who have missed out on the initial move will be looking to get involved. The hammer that formed during the previous session of course is a very strong looking and I think it shows that there is a lot of support all the way down to the 1.30 level underneath. That is the top of the bullish flag, and it should cause a lot of support due to the fact that there is so much in the way of order flow there. I do believe that this pullback should end up being a nice buying opportunity.
GBP/USD Video 16.12.19
Looking forward, if we can break above the 1.35 level the market is going to continue to go to the 1.38 level which is the measured move from the bullish flag. We obviously haven’t gotten there yet, so I do think that we have further momentum ahead of us. This could get a bit of a boost as we are starting to see weaker numbers coming out of the US, but now the question isn’t so much as to whether or not the British pound will go higher, but what news items are going to be coming out of London postelection that will cause volatility. Longer-term, we should continue to go much higher, as the British pound is historically cheap. I’m a buyer of dips, but I would be cautious about putting too much into the market in one shot.
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This article was originally posted on FX Empire
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