If 2016 was the year of political shocks and big risk events driving the Forex volatility at extreme levels, in 2017 we can expect the same market environment to persist. The first week of 2017 should be slow as the majority of market participants and more importantly the smart money are still out of the market due to the New Year’s Day.
The GBPUSD technical pattern remains bearish but, the previous week’s minor rally has broken above 1.2295 intermediate resistance level and warns that we can see at least a pause in the bearish trend. The more optimistic case for GBPUSD is for a sudden spike towards the 1.2500 big psychological number. To the downside, we have 1.2228 as support level followed by last week’s low 1.2200. Any break below last week low should quickly fade away because the stochastic indicator is in oversold territory on a daily basis for quite some time.
The UK economic calendar is empty with no major risk events but we still have major news events from the other side of the Atlantic as Wednesday the FOMC minutes are expected to be released. This will give market participants more insights into Fed’s policy for the upcoming year
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