GBP/USD Rebound Looks to UK Jobs for Fuel- 1.31 Barrier in View
- GBP/USD turns from Fibonacci support ahead of UK jobs data
- Updated targets & invalidation levels
Chart Created Using TradingView
Technical Outlook: Sterling is trading within the confines of a descending pitchfork formation with the exchange rate rebounding off the 88.6% retracement of the post-Brexit advance last night. The focus is on initial resistance at 1.3056 with a breach above the upper parallel / 1.3100 needed to validate a near-term reversal in the pair.
Interim support rests with the weekly open / low-day close at 1.2921/26 with a break below 1.2870 needed to shift the focus back to the short-side. A breakout of this formation targets subsequent topside objectives at 1.3173 & the 61.8% retracement / monthly open at 1.3238/46.
From a trading standpoint, I would be looking to fade weakness while above 1.2950 near-term - we'll have to asses how the pair reacts on a move into the 1.31-handle. For the complete setup and to continue tracking this trade& more throughout the week- Subscribe to SB Trade Deskand take advantage of the DailyFX New Subscriber Discount.
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- A summary of the DailyFX Speculative Sentiment Index (SSI)shows traders are net long GBPUSD- the ratio stands at +2.76(73% of traders are long)-bearishreading
- Yesterday the ratio was +2.34. Long positions are 4.1% higher than yesterday and 36.4% above levels seen last week.
- Open interest is 0.5% lower than yesterday but 10.1% above its monthly average.
- While this would normally be interpreted as a bearish reading, it’s important to note that SSI is approaching post-Brexit extremes and is likely to see limited downside near-term. That said, a pullback off SSI extremes alongside a breach above 1.31 would suggest a larger-scale recovery is underway.
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Relevant Data Releases This Week
Other Setups in Play:
- NZD/USD Advance Eyes Key Hurdle at 7300 Ahead of Labor Report
- EUR/USD: Respect this Slope Ahead of Upcoming Data- SSI Points Higher
- Webinar: USD Crosses in Focus- Levels to Know Ahead of CPI
- USD/JPY Range at Risk as Retail FX Sentiment Comes Off Extremes
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---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.