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GBPUSD Rebound Testing First Resistance Barrier Ahead of BoE

GBPUSD Rebound Testing First Resistance Barrier Ahead of BoE

Michael Boutros, Strategist

Talking Points

GBPUSD Daily

GBPUSD Rebound Testing First Resistance Barrier Ahead of BoE

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPUSD testing resistance confluence into 1.5340
  • Breach targets more critical resistance up into 1.5447/50
  • Interim support at 1.5237 backed by the weekly open at 1.5187 (bullish invalidation)
  • Daily RSI divergence into the lows / pending resistance trigger- Break would be bullish
  • Key Event Risk Ahead: Bank of England (BoE) Interest Rate Decisiontomorrow

GBPUSD 30min

GBPUSD Rebound Testing First Resistance Barrier Ahead of BoE

Notes: Sterling is trading within the confines of a well-defined pitchfork formation off last week’s low with the 9/15 swing low capping today’s advance. A breach above this level targets objectives at 1.5382 & critical resistance up into 1.5447/50 where the 50% retracement converges on the upper median-line parallel.

The focus remains weighted to the topside while above the median-line / 1.5282 with a break below risking a decline towards the lower median-line parallel / 1.5236. A break sub-1.5187 (weekly open) would be needed to put the short-bias back in focus. Bottom line: the long-side is at risk near-term, but we’ll be looking to buy pullbacks while within this formation with a break of the highs targeting the 1.5450 confluence region.

A quarter of the daily average true range (ATR) yields profit targets of 27-30 pips per scalp. Caution is warranted heading into the BoE rate decision with the release likely to fuel added volatility in sterling crosses.

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Relevant Data Releases

GBPUSD Rebound Testing First Resistance Barrier Ahead of BoE

Other Setups in Play:

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

Follow Michaelon Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list

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