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GBP/USD Rebound Targets Major Resistance Ahead of BoE

GBP/USD Rebound Targets Major Resistance Ahead of BoE

Michael Boutros, Strategist

Talking Points

GBPUSD Daily

Technical Outlook: The decline off Friday’s high reversed sharply just pips ahead of support at the December 3rd low-day close. The subsequent rally has taken out the weekly opening range high and keeps our focus weighted to the topside targeting a more significant resistance confluence at ~1.5219/40. Subsequent resistance objectives are eyed at the 200DMA and the 1.618% extension at 1.5383.

Support rests with the lower median-line parallel (red) backed by our bullish invalidation level at 1.4950. A break below this mark shifts the focus towards a major Fibonacci confluence at 1.4847/58. As we approach the holidays and thus illiquid markets, it’s worth reviewing principles that help protect your capital. We call these principles the "Traits of Successful Traders.”

GBPUSD30min

Notes: Sterling has been trading within the confines of a well-defined embedded ascending pitchfork formation with our immediate bias weighted to the topside while above 1.5114/18. Interim resistance stands at 1.5200/18 backed closely by the upper median-line parallels. A breach above these levels would suggest that a more meaningful reversal is underway in the pound with subsequent targets eyed at 1.5272& 1.5318.

A break below 1.5114 would invalidate our near-term outlook with such a scenario eyeing targets into the lower median line. The broader bullish invalidation level remains with the December low-day close at 1.4949. A quarter of the daily average true range (ATR) yields profit targets of 25-28pips per scalp. Added caution is warranted heading into the close of the week with the Bank of England (BoE) Interest Rate Decision on tap for tomorrow and US Retail Sales data on Friday likely to fuel volatility in their respective crosses.

For updates on this setup and more throughout the week, subscribe to SB Trade Desk and take advantage of the DailyFX Subscriber Discount!

Relevant Data Releases Next Week

Other Setups in Play:

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

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

Join Michael for Live Scalping Webinars on Mondays on DailyFX and Tuesday, Wednesday & Thursday’s on SB Trade Desk at 12:30 GMT (8:30ET)

As we approach the holidays and thus illiquid markets, it's worth reviewing principles that help protect your capital. We call these principles the "Traits of Successful Traders.”

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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