GBP/USD Forecast October 27, 2017, Technical Analysis

The British pound initially tried to rally during the day on Thursday, but broke below the 1.3250 level as the US dollar started to gain bullish pressure. The market looks likely to reach down to the 1.31 handle on the short-term, but I also expect to see buyers in that general vicinity. We have made a “higher high, so somewhere between the 1.31 level underneath should offer an opportunity to pick up value. Some type of supportive candle is all I’m looking for, then I start buying again. Given enough time, the market goes to the 1.35 level above, which is a large, round, psychologically significant number. I also believe that the 1.3650 level above continues to be the real test, as it was where we gapped lower from the surprise vote to leave the European Union. That being broken to the upside would be massively bullish for a market that should continue to find plenty of reasons to go higher. After all, the Bank of England looks likely to raise interest rates, and although the Federal Reserve is most certainly going to as well, this currency has been a bit of an outlier against the greenback.
Once we do get to break above that 1.3650 level, the market should then go looking towards the 1.40 level after that. I believe that the absolute “floor” in the resurgence he of the British pound is somewhere near the 1.30 level, so if we can stay above there, it’s only a matter of time before we go much higher. After that, I think that the market then could be one that you could add to your position on the dips, building a larger position for the longer-term move. In the meantime, I expect volatility, but then again is nothing new in this pair.