The GBP/USD is on the verge of breaking the double top as shown in the daily chart below. The pair has pushed down aggressively after creating a double bottom around 1.6250. Currently, the pair is testing the support of the double bottom, and any break lower may solidify the pattern. Then, we can expect the pair to duplicate itself and move lower to around 1.5600 or 1.5500.
GBP/USD Daily Chart" title="GBP/USD Daily Chart" width="560" height="380">
So, I think we should look forward to sell rallies in GBPUSD. Looking at the 4 hour chart, we have a strong resistance now at around 1.6100. Any rallies above 1.6000 may present us a sell opportunity as shown in the chart below. Remember, 1.6100/20 is now a critical swing level, and any break higher may invalidate our bias for the pair. Other than this, if the pair does not move higher and breaks lower, then we may also look to sell after the re-test of the critical support of 1.5910/20.
Initial target should be around the next major support of 1.5750 and final target could be around the duplication level of 1.5600. Stop should be placed above 1.6100/20.
Major events scheduled in the upcoming week
Last week was an interesting one as we saw US dollar finally gaining against most of the major currencies. US dollar registered consecutive six-day gains, which happens very rarely. EURUSD was the biggest loser as the data from the Euro zone disappointed the market, and investors are now pricing in further actions from the ECB in December. The next week’s event calendar is full of risk-events, and one should be very careful while trading as there can be some wild and unpredictable swings. However, we will try to be on the right side of the market as usual.
Let us look at all major events lined up in the upcoming week.
Sunday – Australian Retails sales.
Monday – German, French, Italian and Euro zone composite Manufacturing PMI data and US factory orders data.
Tuesday – Swiss Inflation data, Spanish employment data, UK Services PMI, US ISM Non-Manufacturing Index and Australia’s trade balance data.
Wednesday – UK industrial production data, Euro zone retails sales, German factory orders data, Canadian building permits data and Australian employment data.
Thursday – BOE interest rate decision, ECB interest rate decision, US GDP, ECB President Draghi’s speech, US initial jobless claims and Chinese trade balance data.
Friday – US NFP, US unemployment rate, Swiss employment data, Canadian employment data and Chinese Inflation data.
This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, EURCAD, EURNZD, AUDNZD, AUDCAD, USDTRY, USDZAR, GOLD, OIL, CORN and INDICES.