GBP to USD Forecast – British Pound Looking for Support After Big Selloff

GBP to USD Forecast Video for 09.03.23

British Pound vs US Dollar Technical Analysis

The British pound has been rather quiet during the trading session on Wednesday, as we are hanging around the 1.18 level. It’s probably worth noting that we just broke the very bottom of a massive “M pattern”, thereby from a technical analysis standpoint confirming that the 1.24 level was a potential massive top. If we break down below the lows of the candlestick for Wednesday, and up sensibly blow through the 1.18 level, I suspect that the British pound has another 3 handles to drop.

The 1.15 level does make a certain amount of sense, as it is a psychologically important area, and an area where we have seen a lot of noise in the past. “Market memory” could come into the picture, as traders try to defend that level, and then of course you have the possibility that there might be large blocks of options with strike prices in that general vicinity.

The size of the candlestick does suggest there is going to be further momentum to the downside, so I do like the idea of fading short-term rallies that show signs of exhaustion, and of course a breakdown of the overall lows of the day on Wednesday. I do think that the 1.20 level will continue to be significant resistance, especially now that we have had this candlestick and we have 50-Day EMA sitting just above it. Furthermore, we also have the 200-Day EMA sitting just above there, so that all lines up for a pretty slow.

I do think that there’s some follow-through in the move that we had on Wednesday, and therefore it’s probably only a matter time before we find our way to that aforementioned 1.15 level. If we can break down below there, then the British pound could see a move down to the 1.1250 level next. As far as buying is concerned, we would need to see a significant move above the 1.22 level to even have that conversation, and even then, you have to worry about the double top the just form, suggesting that this may end up being a one-way trade before it’s all said and done.

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