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GBP/USD Daily Outlook- July 8, 2014

By Christopher Lewis

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex...

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The GBP/USD pair fell during the session on Monday, but as you can see found enough support at the 1.71 level to turn things back around and form a little bit of a hammer. This area has been supportive over the last couple of sessions, and we are most certainly and an uptrend to begin with. With that being the case, I am essentially a “buy only” trader when it comes to the cable pair, as I believe breaking above the 1.7050 level was a significant break out in this pair, telling us that the market should eventually go to when I believe that the next massive resistance area, the 1.75 handle. This level of course is a large, round, psychologically significant number, and more importantly a bit higher than we currently are right now. With that being the case, I believe that the market will be one that you can buy on dips, but ultimately should continue to be positive.

Don’t fight the trend, and this could turn into a buy-and-hold situation.

Don’t fight the trend, ever. I believe that the trend since the end of March has been rather strong, even though we did have a bit sideways during part of it. Ultimately though, we build up enough pressure to break out above the significant resistance, and I believe that the longer-term chart certainly look very positive. Breaking out to the upside sends this market heading to the 1.75 handle as I mentioned previously, and I think we go above there as the 1.7050 level was without a doubt in my opinion much more resistive than the 1.75 handle, which ultimately should be broken to the upside.

If we break above the 1.75 level, I believe that this becomes a buy-and-hold situation and we probably will find this market to be one that goes much higher, offering a longer-term trade with a slight positive swap at the end of the day. On the other and, if we broke down below the 1.68 level, I think the market then falls apart. However, I find that scenario almost impossible to imagine.

GBPUSD 7814

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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