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GBP/USD forecast for the week of June 26, 2017, Technical Analysis

The British pound initially fell during the week, crashing into the 1.26 handle. However, we turned around to bounce significantly and form a massive hammer. A break above the top of the hammer, essentially the 1.28 level, should send this market to the 1.30 level and I believe that the consolidation continues. If we can break above that handle, then we are free to go to the 1.3450 handle above. I believe that the volatility will continue to be very difficult, as the headlines coming out of both London and Brussels will continue to dominate everything. However, looks likely that we are trying to break the longer-term downtrend, so given enough time I think we will go higher. This will be especially true once the rest of the world recognizes that the United Kingdom isn’t completely falling apart.

The alternate scenario

If we were to break down below the 1.26 handle, I think that the market would probably go looking for the 1.24 handle underneath. That is an area that should be rather supportive, but a breakdown below there will send this market much lower, and perhaps even to extreme lows after that. I do not have any interest in shorting this pair until that happens, so I remain steadfast in my bullish conviction but also recognize that it is going to be difficult trade. By putting on small positions and adding to them, you should be able to profit quite nicely over the longer-term charts. I believe that once the noises all said and done, this pair could go as high as 1.60, but that’s almost certainly going to be after the end of negotiating between the British and the European Union. In the meantime, I’ll be building a large position.

GBP/USD Video 26.6.17

This article was originally posted on FX Empire

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