GBP/USD: Constructive Above 1.3155- Buy the Dip Setup into UK CPI
- GBPUSD remains constructive heading into key UK data
- Updated targets & invalidation levels
Chart Created Using TradingView
Technical Outlook: Sterling is trading within the confines of an ascending pitchfork formation extending off the yearly lows and heading into tomorrow’s UK Consumer Price Index (CPI) the focus remains weighted to the topside while above 1.3155. This level is defined by the 50% retracement of the advance off the August low & the lower median-line parallel and we’ll reserve this threshold as our near-term bullish invalidation level.
Interim resistance stands at 1.3372 backed by confluence resistance into 1.3465 where the 100% extension converges on the ML. More significant resistance stands at 1.3534/49. From a trading standpoint, I would be looking to fade sterling weakness heading into the release with a breach / close above the ML needed to validate the next leg higher in the pound.For the complete setup and to continue tracking this trade & more throughout the week- Subscribe to SB Trade Desk.
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- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net shortGBPUSD- the ratio stands at -1.21 (45% of traders are long)- weak bullish reading
- Long positions are 1.6% lower than yesterday but 1.5% above levels seen last week while Short positions are 7.2% higher than yesterday (unch on the week)
- Open interest is 3.0% higher than yesterday and 3.5% above its monthly average.
- The trading crowd has grown further net-short from yesterday but moderated since last week. The combination of current sentiment and recent changes gives a mixed near-term trading bias.
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Relevant Data Releases This Week
Other Setups in Play:
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- NZD/USD 2016 Rally at Risk Sub-7500 as Sentiment Stretches
- USD/CAD Rebound Vulnerable to Canada Employment- Key Support 1.2832
- EUR/USD ECB Setup- Outlook Remains Constructive Above 1.1140
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---Written by Michael Boutros, Currency Strategist with DailyFX
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