GBP/USD forecast for the week of August 7, 2017, Technical Analysis

The GBP/USD pair initially tried to rally during the week, and even got above the 1.32 handle. However, we have turned around drastically and fallen towards the 1.30 level. The British pound got a bit of a “double whammy” during the week, as the Bank of England suggested that it was going to be at least 2018 before we sought interest rate hike, and then the jobs number in the United States ended up being stronger than anticipated. This drove US dollar strength, which of course is reflected in the chart. Ultimately, I think that the 1.30 level is important, and a breakdown below there should send the market to the 1.2850 level next.

Volatility

The volatility in this market will probably continue going forward, and I think that the 1.2850 level makes a nice buying opportunity, if it holds. However, breakdown below that level for me census market much lower, and that we will probably break down rather significantly. European currencies suddenly are on the back foot, as the US dollar showing signs of significant strength. Alternately, if we did turn around and break above the 1.32 handle, that would be very bullish as the market should continue to go towards the 1.37 handle. This market has been strong over the last several months, and perhaps we have reached the top. The candle for the week does look very negative, as it is a massive shooting star. It should also be noted that the EUR/USD pair is forming a shooting star, and this looks to me as if the US dollar is suddenly finding a significant amount of buying pressure around the Forex world as it has been oversold as of late. That should reflect itself in this market over the next several candles.

GBP/USD Video 07.8.17