GBP/USD Breakdown Potential on BoE, NFP- Levels to Know
- GBP/USD holding descending channel ahead of key Event Risk
- Updated targets & invalidation levels
- Event Risk on Tap This Week
Chart Created Using FXCM Marketscope 2.0
- GBPUSD fails at slope resistance / 100DMA- bearish
- Support 1.5339 backed by key support into 1.5275-1.53 – Broader bullish invalidation
- Resistance at 1.5475- Breach above 1.55 needed to shift focus back to the topside
- Daily momentum holding sub-60 since June / multiple breaks sub-40 -bearish
- RSI pending support & resistance triggers in play
- Key Event Risk Ahead: BoE Rate Decision & Quarter Inflation Report (QIR) tomorrow & U.S. Non-Farm Payroll on Friday
Notes: Sterling continues to trade within the confines of a well-defined descending pitchfork formation with the pair testing support at the confluence of the 50% retracement & 61.8% extension at 1.5358/68. The focus remains weighted to the downside while within this formation heading into key event risk this week.
A break lower targets support objectives at 1.5339 (confluence of the 61.8% retracement & the 200DMA) backed by the lower median-line parallel and 1.5301/05. Interim resistance stands at 1.54 backed by the upper median-line parallel. A breach above shifts the immediate focus back towards objectives at 1.5444 & 1.5475 with a rally surpassing 1.55 needed to turn the broader outlook back to the long-side for the pound.
A quarter of the daily average true range (ATR) yields profit targets of 25-28pips per scalp. Caution is warranted heading into the close of the week with the BoE & NFPs likely for fuel added volatility in sterling & dollar crosses.
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Relevant Data Releases Next Week
Other Setups in Play:
- NZD/USD Shorts at Risk Ahead of Jobs Data- 6640 Key Support
- Webinar: Big Data Week to Threaten USD- RBA, BoE, NFP Setups in Focus
- AUD/JPY Shorts Primed for BoJ, RBA
- EUR/JPY in Free Fall Ahead of BoJ- Bearish Sub 134
- GBPJPY Shorts Favored Ahead of Major Event Risk
---Written by Michael Boutros, Currency Strategist with DailyFX
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