GBP/USD Price Forecast – British pound sits on major supportThe British pound initially tried to rally in the “risk on” attitude that we had formed after the Americans and the Chinese called a bit of a cease fire in the trade war. Overall, I think that we are getting ready to break down major support though, so that could signify the next major move.
The British pound is testing the 1.27 handle, and quite frankly if we can break down below there on a daily close I think that it opens the door for an extension of the descending triangle that I have been talking about. The descending triangle signifies a potential move down to the 1.22 handle, based upon the height of the shape itself. Ultimately, I think that rallies will continue to offer selling opportunities though, so even if we don’t break down yet, I think it’s only a matter of time before we returned to the lows.
GBP/USD Video 04.12.18
At the top of the triangle, there is a downtrend line like you would expect. If we can break above that downtrend line, that would change a lot and probably send the British pound towards the 1.35 handle above. That’s an area that I think signifies a complete trend change if we can break above it, so I would be very interested in going long at that point. However, that doesn’t happen until the Brexit is negotiated and settled, something that looks very unlikely in the short term. I do believe that we will see a major break down in the British pound yet again, because we are getting closer to the reality of a “no deal Brexit.” If that’s the case, the pound will get hammered for a while, but eventually it becomes a value play.