GBP/USD: Fret Not, a Resolution is at Hand- Critical Support 1.23
- GBP/USD carves weekly opening range just above support
- Updated targets & invalidation levels
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Technical Outlook:Cable is testing a near-term support confluence at 1.2410/33- this region is defined by the 2016 low-day close & the 100-day moving average and is backed closely by the 61.8% line of the ascending pitchfork formation. A break below this mark shifts the focus towards support targets at 1.2363 & 1.2303/17 – bullish invalidation & an area of interest for exhaustion / long-entries. Resistance stands at the March highs with a breach above 1.2675-1.27 needed to fuel the next Big leg higher for sterling.
Notes:A closer look at price action highlights near-term support at the weekly opening-range lows here. Bottom line from a trading standpoint, I’m looking for a resolution to this correction off the March rally with 2-equal legs lower converging on the 61.8% retracement at 1.2301/32- We’ll favor fading weakness while above this threshold with a breach above the weekly range highs / 1.2570 shifting the near-term focus back to the long-side.
A quarter of the daily average true range (ATR) yields profit targets of 24-28 pips per scalp. Added caution is warranted heading U.S. ISM data tomorrow and the latter part of the week with commentary from BoE Governor Mark Carney & Non-Farm Payrolls on Friday likely to fuel increased volatility in their respective crosses.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-short GBPUSD- the ratio stands at -1.16 (46.2% of traders are long)- weak bullish reading
- Long positions are 8.6% lower than yesterday and 8.0% lower from last week
- Short positions are 5.3% higher than yesterday and 12.2% higher from last week
- Although we cannot rule out another run at the lows, the recent build in short-positioning alongside waning long interest does further highlight a bullish SSI bias.
Relevant Data Releases
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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.