GBP/USD Forecast October 30, 2012, Technical Analysis

The GBP/USD pair fell in a steady manner during the Monday session as the British pound in general weekend. We solve Pound weakness against the dollar, the Swiss franc, and the Japanese Yen. With this being said, we are approaching the 1.60 level which of course is a large psychological barrier.

If you look at the recent action in this currency pair, you can see that we are progressively making lower lows, which is the essence of a downtrend. While this still could be considered a pullback at this point time, we must admit that things are looking a bit ominous for this currency pair at this moment in time. Remember, this is a risk appetite influenced pair, and as such if we suddenly get “nervous” around the world, this pair will fall.

If we managed to break the lows from last week, this would be a significant turn of events and we believe that the 1.58 handle would be the next stop. However, we do have to break the 1.60 handle first, and this may provide a little bit of a buffer for the buyers.

Because of this we are kind of at a crossroads now. If we fall and form a supportive candle, then this is a buy signal. But if we break down below the lows from last week, this is a sell signal. It keeps us in a relatively tight range to look for a train signal, but this is the market we find currently.

As far as the central banks are concerned, the Bank of England continues to keep its rates and monetary policy still. By contrast, the Federal Reserve continues to print money like it’s going out of style and by U.S. Treasury’s hand over fist. This is essentially the same thing is devaluing the US dollar, and as such there will always be a least a little bit of a bid in this currency pair with the exception of days that there are absolute negativity in the marketplace is on the whole. With all this being said, we do recognize the 1.60 area as an area to look for telltale signs as to which direction this pair is going to go. We believe that the Tuesday and Wednesday session will be crucial in determining the next move. In the meantime, we will wait for the daily closes of at least one of the session before we make our next trade.


GBP/USD Forecast October 30, 2012, Technical Analysis

Written by FX Empire