GBP/USD Forecast for the Week of January 2, 2012, Technical Analysis

The GBP/USD pair fell over the course of the week, but still remains above the all-important 1.53 level. The area is the bottom of a 200 pip support area that is the neckline for a massive head and shoulder in this pair. If the market can close below the 1.53 level on the daily charts, we would be massive sellers of cable as the head and shoulders measure down to roughly 1.40 or so if we fall. The hammer for the week shows just how difficult it is going to be to break down though, however – one has to remember that the candle from the week before is a shooting star. Not too much can be read into this though as the liquidity has been low over the last week. The pair continues to struggle to get above the 1.57 level, and this is the clearest indication of just how much bearish pressure there is. Until we get a close above that level, we can’t buy this pair. A daily close below 1.53, and we are short for the long-term.