GBP/USD Price forecast for the week of January 8, 2018, Technical AnalysisThe British pound rallied a bit during the week, but continues to struggle at the 1.3650 region, and the thought of breaking it. If we were to get above there, things could get very interesting but at this point I think we are still trying to build up the necessary momentum.
The British pound gapped higher at the open on Tuesday, and then bounced around during the week. We ultimately ended up forming a slightly negative looking candle, but at the end of the day I think that the 1.3650 level above will get broken. It’s going to take a significant amount of time to get above there, and more importantly: momentum. I think pullbacks are momentum building events, and that the 1.3333 level underneath is the floor in the market right now. We also have an uptrend in line just below there, so I think that the forces are building that will be necessary to continue to go higher. Once we clear the 1.3650 level, I feel that the market is ready to go to the 1.40 level after that. We also could find the market going as high as 1.45 next.
If we were to break down below the uptrend line and the 1.3333 level, it would be a very negative sign and could send the market down to the 1.30 handle. However, this is very unlikely to happen based upon recent action, and when you look at the year of 2017, the British pound has done quite nicely, gaining roughly 15 handles. I think pullbacks will only offer value, and eventually we will have to take advantage of that. Lots of noise so far, but eventually I think we will see fireworks to the upside.