GBP/USD Price Forecast – British pound falls to kick off week

The British pound fell to kick off the week on Monday, slicing through the 50 day EMA. However, we have a massive hammer from the Thursday session that counteracts the bearish pressure. The question is whether or not the buyers show up again.
Christopher Lewis
GBP/USD daily chart, February 12, 2016

The British pound broke down a bit during the trading session on Monday, slicing through the 50 day EMA early in the session. However, there is a hammer from the Thursday session that is rather supportive, and I think at this point it’s very likely that the buyers will return though, as we have seen a lot of support near the 1.2850 level. This is an area that has caused the lot of reaction more than once.

Overall, I’m looking for some type of bounce or supportive short-term candle to take advantage of what I think is a market that is still going to try to break out to the upside. Otherwise, if we break down below the 1.28 handle, then I think we go down to the 1.27 level after that, as it is an area that has also been very important. This market is certainly one that is going to be very difficult to deal with, because the Brexit of course continues to cause a lot of headaches as well as headlines. Overall, I do think that the British pound has bottomed for the longer-term, but in the short term it’s very likely that we will continue to be very messy as far as the trading is concerned, because headlines will come out occasionally involving the UK Parliament or other such actors that of course are all vying for attention. In the end, we will find value eventually, the question is when will it happen? I suspect either the 1.2850 level or the 1.27 level will offer that. I’m looking for a hammer or other such candlestick on a short timeframe chart to start buying again.

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