GBP/USD: Declines Before Christmas Present Opportunities

Traders who wish to embark on GBP/USD speculative wagers in the coming days should know they are entering potentially dangerous waters. 

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Yes, there will certainly be wagering opportunities for day traders who wish to partake in the GBP/USD, but thin holiday volumes in Forex and the sudden fall of the currency pair the past week and a half set the tone for a challenging week ahead.

Having fallen to a value near the 1.19960 mark on the 22nd of December, the GBP/USD suddenly found its value testing marks last seen in late November.  A reversal upwards did occur after the storm downwards and on Friday the GBP/USD was trading near the 1.20900 ratios, but upon its close, for the week the Forex pair finished near 1.20510.

Experienced Speculators may be questioning the Results of the GBP/USD

Certainly, the value of the GBP/USD before going into the long Christmas weekend has to be considered the legitimate price, but some traders may believe the selling was a bit too strong. There will be very little economic data in the coming days and until the New Year’s holiday is finished large trading volumes in the GBP/USD will be absent. This means the GBP/USD could be open to unbalanced trades that can move the Forex market with volatility and results that do not seem to correlate with technical and fundamental perceptions.

  • Important mid-term support was tested on Thursday as November values suddenly were seen again. If a fall below the 1.20000 mark is sustained this week, it could make traders nervous technically.
  • The high for the GBP/USD last week was on Monday when the currency pair traded near the 1.22420 ratio.

The GBP/USD Trading Range may be Quiet and Suddenly Violent in the Coming Days

Inexperienced traders who have the desire to continue speculating during the holiday week should be prepared.  The GBP/USD could be quite silent with little price action, which seemingly offers the chance to bet on quick-hitting trades that test support and resistance levels. However, the polite movement of the GBP/USD could be loudly broken by the emergence of a sudden large move which makes all speculators wonder what happened. This could occur if a large position is placed in the GBP/USD which was unexpected and makes the currency pair vulnerable momentarily.

GBP/USD Weekly Outlook:

The speculative price range for GBP/USD is 1.19900 to 1.22350

On the 14th of December, the GBP/USD was trading near a high of around 1.24490 which is a significant achievement taking into consideration that the Forex pair was below the 1.0400 juncture in the last week of September this year. The sudden decline in value the GBP/USD has seen in the past week and a half may be a combination of selling which has occurred because some financial houses believed the GBP had been overbought taking into consideration lingering economic issues which still face the U.K.

Last week’s selling technically may be of interest to traders who believe the 1.21500 mark after being sustained lower was important. However, experienced speculators may also consider the notion that Thursday and Friday’s selling action occurred on rather light trading volume and may not be a real insight regarding where the equilibrium for the GBP/USD should be in the coming week. Day traders who try to pursue the GBP/USD in the coming days should not expect a sudden 100% recovery in value though, because what proved to be difficult trading waters late last week may remain the same in the coming days.

The GBP/USD may look oversold in its current depths, but traders need to be careful.  Values this week are certainly true and reflect real prices. Holiday trading has a history of proving rather troublesome and speculators need to monitor their positions and be able to react swiftly. The use of solid risk management in the GBP/USD this week will be important.

GBP/USD


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