GBPUSD - Profit taking potential but room to buy a dip

The GBPUSD decline from last Friday’s high ended sharply yesterday as investor sentiment turned. Strong gains were seen especially in the latter part of the day and this move highlights the limited setback of the last three weeks. Momentum is now positive but the speed and scope of the improvement has taken intraday studies to overbought extremes and so there is potential for early profit taking. In view of this our call is Bullish but to leave room to Buy a Dip to 1.6168. The risk is 1.6131 and the immediate target is 1.6215. A move above that level then targets 1.6236 and 1.6274, the open and high from last Friday.

The risk to this call is a move below 1.6131, half of yesterday's net gains, indicating that profit taking is deeper than assessed back to 1.6104, yesterday's European afternoon low.