GBP/USD Forecast: GBP Gives Up Gains Despite Poor Jobs Data

Until I see something different, I still like shorting.

The British pound fluctuated to show signs of hesitation just above the 1.36 level yet again. The market rocketed higher during the early part of the session, as the US jobs number came in much less stringent than initially thought. Forming the shooting star suggests that we are ready to go lower. That obviously is what we have been doing for a while, so this should not be much of a surprise. Breaking down below the bottom of the candlestick for the trading session on Friday continues the overall attitude that we have seen for several months.

Looking at the chart, you can see that the 50-day EMA is getting close to breaking below the 200-day EMA, sitting right at the 1.37 handle. All of that offers a bit of a ceiling for the market, and it is likely to be like a brick wall. In fact, I would look at any rally between now and then as a potential shorting opportunity, at least at the first signs of exhaustion. That being said, if we were to break above the 1.37 region, then we could see a bigger move. However, there is also the downtrend line that we need to pay close attention to, so with all of that being said, it is really not until we clear that you can enter more of a “buy-and-hold” type of situation.

To the downside, a move to the 1.35 level is likely from what I see, especially if we continue to see a lot of concern about the global growth situation, not to mention the fact that the United Kingdom itself is having to use military to fill up petrol stations. That in and of itself is a bad look for an economy. Beyond that, we have also heard this week from a Bank of England member suggesting that negative interest rates were still “on the table.” When you look at this chart, you can see we have clearly been making lower highs, and even though we had a shot higher during the day on Friday initially, that is still the case; so by all definitions, we are still at the very least in a medium-term downtrend. Until I see something different, I still like shorting.

GBP/USD

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.