GBP/USD Price Forecast January 5, 2018, Technical Analysis

The British pound rallied a bit during the trading session on Thursday, but then turned around to look likely to fall towards the 1.35 handle underneath. Ultimately, I believe that the uptrend should continue, and therefore I think that given enough time we are trying to reach the 1.3650 level, the scene of a massive gap lower than that had sent the British pound much lower. If we can break above that level, the market should continue to go much higher, perhaps reaching towards the 1.40 level above. In general, I believe that the British pound does managed to break out to the upside, but I also believe that the market will be very noisy between now and then. Because of this, I think that being very patient is probably the best way to trade this market, meaning that I would start out with a small position to the upside, and then add as we go long. I would become much more aggressive above the 1.3650 level, as it should allow the market to shoot to the upside.

The 1.3333 handle underneath is continuing to be the “floor” in the market, and that being the case it’s likely that the markets will be a “buy on the dips” scenario going forward, but if we did somehow break down below the 1.3333 handle, then I think the British pound would be in trouble. It looks less likely each day, and I do think that ultimately we will see this market break out to the upside, making me very optimistic, but I also recognize we have a lot of work to do before we get that move.

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