Video Analysis – GBP/USD January 15, 2015

Taking a look at the GBP/USD pair, you can see that we broke out during the session on Wednesday, cracking the top of the two hammers in a row that we had formed. We formed a hammer before that as well, so it does look like a market that wants to breakout to the upside. Yes, we have pullback a little bit from the highs of the day, and I do not expect an easy ride. However, I do think that this market looks like it wants to go higher.

The 1.50 level below is about as big of a round number as you can get, so buying support in that area makes a lot of sense. We believe that the 1.5350 level above could be a little bit resistive, but the real target is probably going to be to the 1.55 handle. That area was once massive support, so it makes sense that should now be significant resistance. Remember, this is a countertrend trade, so it will never be smooth. Choppiness will be the norm for this type of trade, and this is one of those trades that you may simply want to press the button and walk away. It will be very volatile to watch.

If we can get above the 1.55 handle, at that point time we could be talking about a potential trend change. However, we will have to cross that bridge when we get to it as there will be a lot of factors between here and there that could change my opinion.