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GBP/USD forecast for the week of January 25, 2016, Technical Analysis

By:
Christopher Lewis
Updated: Jan 23, 2016, 06:45 UTC

GBP/USD pair fell significantly during the beginning the week, testing just above the 1.40 handle. However, we found enough support to turn things back

GBP/USD forecast for the week of January 25, 2016, Technical Analysis

GBP/USD pair fell significantly during the beginning the week, testing just above the 1.40 handle. However, we found enough support to turn things back around and form a massive hammer. The hammer of course is a very bullish sign so it is possible that we could get a bounce from here. On a break above the top of the hammer, we would anticipate that this market could very well go to the 1.45 level, and then perhaps even higher than that. Having said that though, this is a very bearish market, so we are more than likely going to see a bounce followed by extended selling pressure yet again. Because of this, we are very cognizant of the fact that a resistive candle above could be a warning sign to get out for longer-term bullish traders.

On the other hand, if we break down below the bottom of the hammer, that is a very negative sign. That could send this market looking for the 1.40 level, and then perhaps even lower than that given enough time. If we break down below the 1.40 level, that would be extraordinarily bearish for this pair. Quite frankly, we feel that this market will more than likely bounce, so having said that it is probably only a matter time before we get that move.

A resistant candle above is a selling opportunity in our opinion as it could build up momentum in order to continue dropping much lower. At this point in time, it is not until we break above the 1.50 level that we feel it is a longer-term “buy-and-hold” type of market. That is the type of scenario find yourselves and, but with the overextension of the selling pressure it would make sense get a bit of a bounce as we have to be running out of sellers for the short-term. Ultimately, the British pound has been oversold so with that it makes a lot of sense for this market to form a bit of a relief rally over the next couple of weeks.

 

GBP/USD forecast for the week of January 25, 2016, Technical Analysis
GBP/USD forecast for the week of January 25, 2016, Technical Analysis

 

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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