GBP/USD forecast for the week of December 24, 2012, Technical Analysis

The GBP/USD pair initially rose during the week, slamming into the 1.63 handle. However, we found that level to be far too resistive and plunged back down to basically where we started. This has formed a shooting star at the top of a significant consolidation area, and as such we feel like this market is not quite ready to break out to the upside yet. We are still stuck between 1.63 and 1.58, and as a result a breakdown of the bottom of this candle that we have just formed would be enough for us to consider selling for a two or three handle move. On the other hand, if we break the top of the shooting star, this would make a breakout above the 1.63 level that much more bullish.