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GBP/USD: UK Employment Game Plan- Constructive Above 1.44

GBP/USD: UK Employment Game Plan- Constructive Above 1.44

Michael Boutros, Strategist

Talking Points

  • GBPUSD 1.44-1.4530 key range in focus ahead of UK Jobs Report
  • Updated targets & invalidation levels
  • Check out FXCM’s Forex Trading Contest!

GBPUSD 30min

Chart Created Using FXCM Marketscope 2.0

Technical Outlook: Last week I noted that, “From a trading standpoint, the move off parallel resistance noted last week remains in focus and I would be looking for support heading into the lower median-line parallel (blue)...” Sterling opened the week at this parallel on building divergence and we’ve been tracking this rally on SB Trade Desk since the open. Heading into tomorrow’s U.K. employment releases, the immediate focus remains higher / looking to buy pullbacks while above confluence support at 1.4405 with a break below the weekly open at 1.4346 needed to shift the near-term outlook back to the short-side.

Near-term resistance stands at 1.4528/33- a region defined by last week’s high and the monthly high-day close (that was the day we tested & failed at the 2016 open 1.4730). A breach higher eyes subsequent resistance objectives at the February high-day close at 1.4588-1.46, an area where the near-term rally would start to look vulnerable. We’re also tracking a similar setup in GBPJPY. Keep in mind we also FOMC Minutes tomorrow and UK Retail Sales on Thursday.

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  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders remain net long sterling- the ratio stands at just 1.10 (52% of traders are long)- weakbearish reading
  • Yesterday the ratio was 1.27; long positions are 7.6% lower than yesterday and 4.2% below levels seen last week
  • The recent reduction in long exposure suggests the immediate pullback bias remains at risk near-term
  • Open interest is 1.4% lower than yesterday and 0.3% below its monthly average

Why and how do we use the SSI in trading? View our video and download the free indicator here

Relevant Data Releases This Week

Other Setups in Play:

Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016

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

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