GBP/USD forecast for the week of December 18, 2017, Technical Analysis

The British pound initially tried to rally during the trading sessions that made up the previous week, but as you can see the 1.35 level turned out to be a bit too difficult to overcome. By rolling back over, it’s likely that we will show signs of weakness again as we have formed a shooting star, but I think there is plenty of support on the uptrend line. There are a lot of concerns with the future the British economy, but quite frankly I think those are overblown. Alternately, if we break above the top of the shooting star that is a very strong signal, and could send this market looking towards the 1.3650 level which is my target longer-term. A break above there of course is a “buy-and-hold” scenario just waiting to happen.

If we were to break down below the uptrend line, then the market should go down to the 1.30 level next. I believe that a lot of this will come down to headlines coming out of the negotiations of course, because quite frankly with the inflation picking up in the United Kingdom, I fully anticipate that eventually the British pound will turn around and go much higher. Historically, these are extraordinarily low levels against the US dollar, and therefore will correct themselves given enough time. In the meantime, be careful that you don’t over leverage your position, but I think longer-term traders will find the upside to be quite profitable over the next several months ahead. A breakdown below the 1.30 level would be catastrophic though.

GBP/USD Video 18.12.17