GBP/USD a week ahead

The talk of a Brexit continues to impact the GBP/USD. The pair now consolidates that could see some dramatic moves in the week ahead.

The technical indicators are showing some interesting signals as the RSI Oscillator remains relatively flat, near oversold territory, despite the recent price declines. There is some divergence between the indicator and price action that could be indicating a reversal of the short term trend.
Traders have to consider for the entry of a long position above the key 1.4170 resistance level. Alternatively, a break below the 1.40 handle would indicate a sharp push towards the bottom of the channel is likely. However, be aware of any short side move as the Risk/Reward ratio is not advantageous.

The pair  is likely to wait upon the UK Manufacturing Production results before making a strong move. However, given the recent collapse in the pair’s value, the downside might be relatively limited. The most likely scenario is a sideways consolidation at the current level .

GBP/USD

The larger picture would points towards a big increase to a possible 1.48000. A practical solution would be to wait for an increase in momentum or a second upwards break of the 1.44356 support.

While committing to a buy position now could prove beneficial, a chain of positions is advised while the correction formation presents itself and can be observed better.

Friday: Not much is expected except for the University of Michigan consumer sentiment, but be aware of a strong upwards move incoming.

An alternative scenario is a possible turnaround with the initial markings of a head and shoulders – something to be aware of in case of a fall and bounce off the 1.40000 support.

GBP/USD Strong BUY

GBP/USD

While at the moment the trend is set upwards after bouncing off the 1.4000 support, we need to consider the possibility of a decline to gather momentum after such a big and sudden jump. After the big turmoil on Thursday (today) and with the lack of any serious fundamental sentiment until the end of the week it is very likely that the trend follows into a corrective formation that could continue for a while