GBP/USD Forecast October 18, 2017, Technical Analysis

The GBP/USD pair fell during the session on Tuesday, reaching towards the 1.3175 level underneath. I think there is plenty of support there though, and I think we will probably bounce. The 1.3250 level above is resistance though, so I think if we can break above there and then the buyers will become a bit more aggressive. This is a very difficult pair to trade right now, because a lot of the movement is due to the headlines crossing the wires about the United Kingdom leaving the European Union. Because of this, it’s very difficult to trade this market, because there is so much in the way of potential volatility. Ultimately, I do think that we go higher, so this pullback should be thought of as a buying opportunity, but position sizing should be small as the volatility could work against you rather quickly and suddenly.
If we can break above the 1.3250 level, then I think the market goes looking towards higher levels, perhaps a 1.35 level above. Either way, expect a lot of noise, so that’s why I prefer to add to positions that are profitable already, and therefore start out smaller. If we are to break down from here, then I think the 1.30 level underneath is the “floor” in the market overall, and will protect the uptrend. I think that a breakdown below there would be very negative for this market, but it seems to be unlikely due to the massive support that we have seen their more than once. Longer-term, we will go looking towards the 1.3650 level, which was the scene of the gap lower after the surprise vote out of the United Kingdom to leave the European Union. Because of this, once we do break above there I would be a longer-term “buy-and-hold” signal, but right now it seems like that’s a long way away.