Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
GBP/USD Eyes Last Line of Defense Ahead of UK Jobs, US CPI

GBP/USD Eyes Last Line of Defense Ahead of UK Jobs, US CPI

Talking Points

  • GBP/USD Responds to slope support- Key resistance 1.2433
  • Updated targets & invalidation levels
  • Click Here to be added to Michael’s email distribution list.

GBP/USD Daily

GBPUSD Daily Chart

Technical Outlook: Sterling rebounded off median-line support yesterday extending off the July high with the subsequent rally now approaching structural downtrend resistance at 1.2381-1.2433. This zone is defined by the 50% retracement of the December decline, the upper median-line parallel extending off the September high and the 2016 low-day close.

Note that the pair has been marking bullish divergence into these lows and we’ll be looking for a close above the resistance trigger to further validate this shift in behavior. A close above this region would be needed to suggest a more significant low is in place with such a scenario targeting the 100-day moving average at ~1.2560s.

GBP/USD240min

GBPUSD 240min Chart

Notes: A closer look at price action highlights confluence resistance at the upper parallel, backed closely by 1.2433- This is the last line of defense for the downtrend off the July highs. A breach / close above 1.2474 (61.8% retracement) eyes subsequent topside objectives at 1.2589, 1.2671 & 1.2767.

Bottom line: If sterling has made a near-term low, price should hold above the Friday close / 50-line around 1.2177 with a break sub-1.2044 needed to mark resumption of the broader downtrend. From a trading standpoint, we’re at risk for a pullback here & we’ll be looking for a pullback to offer favorable longs while above the median-line. A quarter of the daily average true range (ATR) yields profit targets of 34-37pips per scalp. Caution is warranted heading into UK employment & U.S. CPI data tomorrow with the releases likely to fuel added volatility in the GBP & USD crosses.

  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net short GBP/USD- the ratio stands at +1.29 (56% of traders are long)- weak bearish reading
  • Long positions are 17.2% lower than yesterday and 23.8% below levels seen last week
  • Short positions are 94.2% higher than yesterday and 87.4% above levels seen last week
  • Open interest is 10.5% higher than yesterday & 15.7% above its monthly average.
  • The current dynamic of increasing short-exposure on building open interest suggests the immediate risk remains higher. Look for a flip to net short in the days to come to suggest a more significant reversal is underway.

Relevant Data Releases

Other Setups in Play:

Looking for more trade ideas? Review DailyFX’s 20171Q Projections

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

Join Michael for Live Weekly Trading Webinars on Mondays on DailyFX at 13:30 GMT (8:30ET)

FollowMichael on Twitter @MBForex or contact him at mboutros@dailyfx.com

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

DISCLOSURES