GBP/USD Price Forecast – British Pound Continues Correction

The British pound has fallen again during the trading session on Friday to break down below the 1.40 level. That being said, the market has been straight up in the air for a while, and therefore it is worth paying close attention to because of the overbought condition. I do believe that eventually we will probably see the market rally back towards the 1.42 level, which was a major resistance barrier on longer-term charts, and I also believe that if we can break above there, we need more momentum. We had gotten so far ahead of ourselves that it is difficult to imagine how that momentum would have suddenly just appeared out of the blue, and therefore I think what we are looking at is the market simply trying to figure out how to build up the momentum.

GBP/USD Video 1.03.21

To the downside, I believe that the 1.3750 level will continue to be the “floor” in the market, and I think at this point in time we will see that offer quite a bit of support based upon “market memory” due to the fact that we had broken out from there previously. I think there are enough people willing to get back into the market in that area that it sets up as the “perfect reentry point.” Whether or not we get down there is a completely different question, but I certainly would be more than interested. The one thing that you should take away from this article is that I have absolutely no interest in trying to short the British pound, even though it has so obviously overbought. With that in mind, I think we are looking at a scenario where we continue to try to break out towards the 1.50 level longer term.

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