British pound ready for big move?

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This coming week, I think the most important chart to pay attention to, with maybe the exception of the 10 year yield in the USA, is the GBP/USD pair. This pair has been behaving quite strong for sometime, as Sterling has outperformed many of its G-10 counterparts against the greenback.

When looking at this daily chart, there are a couple of things that stand out. The first thing is the massive trendline that we are currently up against. It is likely that if the USD starts to fall in general – this could be one of the biggest break outs. (It is worth noting that later on Friday, we started to see dollar selling. Whether it holds or not remains to be seen.) The second thing that catches my eye is that we are currently hanging about the psychologically important 1.35 level. This in an of itself should attract a lot of attention.

You can see my simple set up for this market. If we break that trendline on a daily close, I am a buyer….possibly looking to reach 1.38 initially. On the other hand, if we break below the 1.35 level on a daily close, we may have seen the peak for a while. Decisions are about to be made. Keep your eyes open.

Chris

GBP/USD daily chart
GBP/USD daily chart

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