GBP/USD Forecast May 3, 2017, Technical Analysis

The British pound continues to show signs of life as we have had a volatile session on Tuesday, initially falling but then breaking higher and clearing the 1.29 handle again. It looks likely that the market will continue to find buyers on dips, but the 1.30 level above of course has a certain amount of psychological significance built in due to the fact that it is a large, round, psychologically significant number. I currently believe in buying dips when it comes to the British pound, as it has recently broken out. The United Kingdom leaving the European Union created an opportunity to buy the British pound cheaply by long-term traders, and I think that’s exactly what starting to happen.
The 1.29 level should be supportive, and I believe that as long as we stay above there the buyers will become very interested in going long. I don’t necessarily think that it’s going to explode to the upside, but certainly it feels very well supported underneath. Ultimately, I think that we break above the 1.30 level and then go looking for the 1.3450 level after that. It is a longer-term resistance barrier on a longer-term consolidation area that we find ourselves and now. It makes a perfect target, and I think that’s exactly where traders are trying to go. It will be volatile, but certainly we seem to have plenty of buyers out there waiting to pick up value in the British pound as it appears cheap when we dip. I don’t have any interest in selling, and I believe that the value hunters continue to be longer-term players in this market. It will be volatile, but certainly there seems to be quite a bit of optimism and I believe that the longer-term downtrend is over.
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