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GBP/USD Rebound Looks to UK Jobs for Fuel- 1.31 Barrier in View

GBP/USD Rebound Looks to UK Jobs for Fuel- 1.31 Barrier in View

Talking Points

  • GBP/USD turns from Fibonacci support ahead of UK jobs data
  • Updated targets & invalidation levels

GBPUSD 120min

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.

Help fine-tune you entries, click here to learn more about the DailyFX Grid Sight Index (GSI)

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.