The British pound rallied significantly on Friday, reaching above the 135 level, which of course is a large, round, psychologically significant number. By doing so, we have broken another barrier, and I think we are now ready to go towards the next major barrier, the 1.3650 level. It was at that level that we had a massive gap lower that sent the British pound reeling, and I think if we can break above that level, it’s likely that we will see a continuation of the uptrend that we had formed this year. That could send the British pound as high as 1.50 over the longer term, offering plenty of opportunities to buy on dips going forward. I would build my position up slowly, I think this is going to take quite a while to get to, and could be a move towards the end of 2018. In the meantime, I like buying dips, but I recognize that a move below the 1.3333 handle underneath invalidates most of the technical analysis that I have seen lately.

We might be a bit overextended and the short-term, but I think there should be plenty of support near the 1.3450 level as well, so at this point I have no interest in shorting this market, I believe that the US dollar falling is going to continue into the new year, and with the jobs number coming out this week, it’s likely that the volatility will pick up towards the end of the week.

GBP/USD Video 02.01.18

This article was originally posted on FX Empire

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