GBP/USD forecast for the week of December 31, 2012, Technical Analysis

The GBP/USD pair fell during much of the week as the support came in right around the 1.6050 level. The resulting candle is a hammer, but was preceded by a shooting star. What we believe is that we are currently heading into consolidation area, but still have an upward bias the fact that the shooting star could not trigger off a massive selloff suggests to us that this pair will eventually break the 1.63 handle. This of course has been our base case going forward, and we still stand by it. However, we think currently the market is bouncing around between 1.60 and 1.63. With that being said, it’s going to be a little bit difficult to take a long-term trade until we break out to the upside.