Technically the GBP/USD pair looks like it will attempt to continue its corrective move up as we reported in last weeks Blog. Key levels to watch this week if you are in this trade with us are 1.9599 (a break below would indicate a continuation of the downtrend), and any move above 2.0023 (this would set a higher low and higher high if 1.9599 did not get penetrated). The hard stop should still remain at 1.9361 until a medium term trend establishes.
Elliot wave analysis further points to a decline in the US Dollar across the board.
Analysing the fundamentals, with last weeks news from the Bank of England and the lack of news from the US Fed, we still like the looks of GBP/USD being a strong pair to trade against the dollar. The only fundamental concern we have is with the start of the summer travelling season. Early indications are pointing to a light travel season due to the increases in oil and airline prices. This generally causes a decrease in liquidity in the Forex markets as major banks are not exchanging currencies as much. A decrease in liquidity amplifies any market volatility.
Looks like a wild summer trading season, which should allow for plenty of profitable trades for the retail Forex trader who utilize proper risk management techniques.
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With the lots of number of private and corporate investors investing in the forex market, it would seem to be an incredibly lucrative opportunity to get involved in.
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