GBP/USD Forecast October 13, 2017, Technical Analysis

GBP/USD daily chart, October 13, 2017

The British pound struggle during the Thursday session, as we had initially rallied, but then broke down significantly. We cleared the 1.32 level to the downside, showing signs of significant weakness. Because of this, the market tested the 1.31 level underneath, an area that has been supportive in the past. We have bounced from there, and that of course is a bullish sign. If we can break above the 1.32 handle, the market should continue the uptrend. I recognize that there are a lot of headline risks when it comes to the British pound, but I think we will eventually see buyers come back into the market. I also recognize that if we were to break down below the 1.30 level, that would be very negative, and could breakdown what has been a somewhat strong buying opportunity.

Ultimately, the market should go looking towards the 1.3650 level, but that’s an area where we had gapped lower from the vote to leave the European Union. I think it will take several attempts to break above that level, and once we do, it would become a “buy-and-hold” market. The market comes back to the 1.32 level several times over, and I think that will continue to be a bit of a magnet for price. Volatility continues to be a major issue, so I would be very cautious about owning too much of a large position. Ultimately, this market needs to make some type of longer-term decision, but in the midst of a trend change, it’s very likely that we will see even more in the way of volatility. The market had been selling on for so long, there is a lot of negativity to chew through to change everything around. Ultimately, caution is advised when it comes to this pair.

Written by FX Empire