GBP/USD Price Forecast – British Pound Gives Up Early Gains

The British pound has initially tried to rally during the trading session on Tuesday but gave back gains rather quickly to show signs of hesitation just above the 1.36 level. This is an area that was previous support on a massive descending triangle, so a bit of “market memory” could come into the picture. Because of this, I am looking for signs of weakness that I can start shorting. At this point in time, the market is likely to go looking towards the 1.35 handle, and if we can break down to a fresh, new low, then the market is likely to go much lower.

GBP/USD Video 06.10.21

To the upside, if we were to break above the top of the candlestick for the trading session on Tuesday, then we have the 200 day EMA hanging around the 1.37 handle. The 50 day EMA is starting to come into the picture and is starting to drift lower, perhaps opening up the possibility of a “death cross” forming. At this point, I do not trust rallies, and I recognize that the jobs number coming out on Friday could be a huge factor on where we go next. Nonetheless, I think at this point in time the market looks a bit exhausted, so on the pullback I think we will probably pick up downward momentum.

At this point, I would be small in my position size, and then simply add when the trade starts to work out in my favor. Until then, you have to be very cautious, but recognize that the most likely of scenarios is that we drift lower.

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