Hello and welcome back to CantosCharts. I'm David Jones from IG Index and today we're going to take a look at what could be a fairly immediate trading opportunity in GBP/USD.

As usual, we'll start with the longer term picture for GBP/USD. So this is going back the last year and a few months and for much of the second half of last year we saw a fairly range bound market but trading in again a very tradable range, a very wide range. We saw most currencies decline against particularly the UK currencies like the EUR and the GBP decline against the USD in November last year when the Irish sovereign debt crisis really bit. But I think the strength that we've seen recently maybe sets up a fairly clear signal as to where we may be heading next and it's this opportunity I want to talk about.

So in recent weeks we have seen GBP against the USD poke its way through the 163 level and back out to its best levels since January 2010. Now for many people, a breakthrough a previous level like that can be a sign that there is real momentum behind the price and away we go off to higher levels. This didn't turn out to be the case, so we had something of a failed break I think in the short-term for GBP against the USD. But again, failed breaks like that can still present us with opportunities, so for that, let's look to the short-term chart.

This is a shorter term chart GBP/USD. So this is the latest leg of the trend that started in late January and we pushed out early March back up to the best levels since January 2010. But we've seen a fairly quick reversal off those levels. In the space of a little under a couple of weeks the GBP had dropped by about 300 points against the USD. So for many people, the break of a trend line like this means that's it all over and the trend is going to reverse. But it can just mean that this is just the trend slacking off. I think for now, this is what we're seeing in GBP/USD. Yes it has dropped a few hundred points, but the lows that we saw mid to late February just ahead, you can see it fairly clear on the chart, a few little declines over a couple of days back towards the 159.50 level brought the buyers back out and we saw the market springboard up about 400 points from that level.

We have seen a similar thing happen just in the last couple of days. The GBP made a brief foray below 160. It's turned round and it has bounced back 100 points. So for me at the moment, this 159.50 level, 159.50 to 160, is providing real support for this market.

So if like me you believe the bias for the GBP is still upwards - don't get me wrong, I think we may see overall for this year a fairly flat performance by the GBP against the USD but with plenty of volatility on the way - but if like me you think well this is going to provide a floor for the market, clearly, any weakness back down to those low 160s looks to be a buying opportunity with stop losses down below the 159.50 mark and looking for a run back up to at least have a look at those highs from early in March 163.50.

So although all sorts of markets are very unclear, I think in the short-term because of what's going in from a geopolitical point of view, we are still seeing these shorter term levels on GBP/USD hold up and I do think it is probably the market to watch over the next couple of days.

That's it from me for this time round on CantosCharts. I hope you found it useful and I look forward to looking at some other markets in the future.