GBP/USD Weekly Price Forecast – British pound has eventful week

The British pound fell significantly during the week, testing the 1.27 level for support. It did in fact find it there, and then turned around to test the downtrend line from the descending triangle that we had been in. We have pulled back from there as well, showing just how erratic and noisy this pair is going to be in the short term. If we can break above the red moving average on the chart, the 50 EMA weekly timeframe, then we could go much higher, perhaps reaching towards 1.33 level, maybe even the 1.35 handle. The premise of this potential break out to the upside is that the Brexit may get pushed back, and that seems to be the base case of traders right now.

GBP/USD Video 21.01.19

If we break down below the 1.27 level, that would be very negative and we would almost certainly have to go down to the 1.25 handle next. I think at this point we will continue to trade back and forth on the occasional headline, and unfortunately Twitter. There are a lot of algorithmic traders out there that have been throwing the market around and playing games, and I think that continues to be the case. This is going to be very dangerous pairs to be involved in with any type of major leverage, so keep that in mind. I would be very cautious about going “all in” anytime soon. That being said, I do think that we are getting relatively close to the bottom, but we are at their quite yet.