GBP/USD Into Support- Shorts at Risk Above 1.44
- GBPUSD eyes key support into 1.44- constructive above this level
- Updated targets & invalidation levels
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Chart Created Using FXCM Marketscope 2.0
Technical Outlook: Last week I highlighted confluence support at the 1.44-handle ahead of the UK employment report with our bias weighted to the topside. Indeed in the subsequent days, cable rallied through all of our topside targets before reversing off slope resistance late in the week. Critical near-term support once again falls on this region with the 1.4392/97 zone now defined by the 61.8% extension of the decline off the monthly high, the median-line extending off that same high, the May low-day close and the lower median-line parallel extending off the 2016 low. From a trading standpoint, I would be looking for long entries into this region with a breach above near-term down-slope resistance needed to validate the turn higher.
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Notes: Momentum divergence into this move lower leaves the short-side vulnerable heading into key support. Note that a near-term descending median-line formation also highlights this key region with the lower parallel converging on the 1.44-handle heading into tomorrow. We’ll continue to reserve this threshold as our bullish invalidation level- looking to buy pullbacks while above.
Interim resistance stands at 1.4487 with a breach above channel resistance (grey) targeting the May high-day close at 1.4533 and the upper median-line parallel / February high-day clos / May open at 1.4580/88. A close above this level is needed to validate the next leg higher targeting key resistance into 1.4664/83. A quarter of the daily average true range (ATR) yields profit targets of 30-34 pips per scalp. Added caution is warranted heading into the BoE testimony with the commentary likely to fuel increased volatility in sterling crosses. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.
Relevant Data Releases
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Other Setups in Play:
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- AUD/JPY Targets Support Ahead of Australian Employment Report
- GBP/JPY Rally Eyeing Near-term Resistance Targets
---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.