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GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065

GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065

Michael Boutros, Strategist

Talking Points

  • GBPUSD completes outside day reversal off key support
  • July opening range high remains intact
  • Event Risk on tap from UK & US this week

GBPUSD Daily Chart

GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPUSD defends key support structure- outside reversal day – bullish
  • Sterling remains constructive above key support 1.7045/65- bullish invalidation
  • Break eyes support objectives at 1.6972/85, 1.6890
  • Key resistance at July ORH at 1.7176- bearish invalidation
  • Breach targets objectives at 1.7245 & 1.7300/30
  • Daily momentum reversal at 60- constructive
  • RSI resistance trigger pending
  • Event Risk Ahead: UK Employment & US Industrial production data tomorrow and University of Michigan Confidence survey on Friday.

GBPUSD 30min Chart

GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065

Notes: Today’s better-than-expected CPI print offered a catalyst for the pound which was trading just above critical support at 1.7045/65. The subsequent rally has now completed and outside reversal day for the pair and keeps our focus weighted to the topside while above today’s low.

That said, the pair failed to push through the initial July opening range high and while our broader bias remains constructive, we will respect this range until a close above is achieved. Bottom line: looking to buy pullbacks while above 1.7045/65 with a breach of the monthly high at 1.7176 targeting topside objectives at 1.7245 and 1.7300/30. A break/close below 1.7045 invalidates this particular setup with such a scenario risking a pullback into support targets sub-1.7000.

Caution is warranted as we head into event risk later this week with the UK employment report and US industrial production on tap tomorrow. The headline UK ILO unemployment rate is expected to fall from 6.6% to 6.5% and the release may offer a catalyst for sterling’s next move. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Technical Relevance

Bearish Invalidation

Daily / 30min

1.7178

July ORH

Break Target 1

Daily / 30min

1.7245

R1 Monthly Pivot

Break Target 2

30min

1.7285

100% Extension

Break Target 3

Daily

17300

100% Extension

Break Target 4

Daily

1.7330

50% Retracement

Break Target 5

Daily

1.7397

1.618% Extension

Support Target 1

30min

1.7140

38.2% Retrace / Weekly ORH

Support Target 2

30min

1.7108

61.8% Retracement

Support Target 3

30min

1.7086

78.6% Retracement

Bullish Invalidation

Daily / 30min

1.7045/63

100% Ext(s) / 09 High / June Swing / 23.6% Retrace / Channel Sup

Break Target 1

Daily / 30min

1.6993 – 1.7004

Soft Pivot / 38.2% Retracement / May High

Break Target 2

Daily / 30min

1.6972/84

Monthly Pivot / 2009 Close High / May Close High

Break Target 3

30min

1.6930/35

50 DMA / 50% Retracement

Break Target 4

Daily / 30min

1.6879/90

78.6% Ext / 61.8% Retracement

Average True Range

Daily (20)

68

Profit Targets 17-19pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars this week Tuesday – Thursday on DailyFX Plus (Exclusive of Live Clients) at 15:30 GMT (11:30ET)

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