GBP/USD Technical Outlook: Sterling Rebound Eyes Initial Resistance
- GBP/USD rally testing initial resistance targets ahead of RBA- constructive above 7559
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The British Pound has rallied nearly 2% off the May lows with the advance now approaching initial topside resistance targets. The focus remains on a stretch into yearly open resistance with a breach there needed to suggest a more significant low is in place. Here are the GBP/USD levels that matter heading into the close of the week.
GBP/USD Daily Price Chart
Technical Outlook: In this week’s British Pound Technical Perspective, we highlighted a structural support range in GBP/USD while noting that, “IF Sterling is going to bounce near-term, this would be a good spot.” The reversal off slope support has gathered pace mid-week with the pair testing slope resistance today in New York.
Key resistance stands just higher at 1.3464 & 1.3495-1.3504 – both areas of interest for possible near-term exhaustion / short-entries. Key support remains at 1.3182-1.3225 where the August high-close and the 50% retracement converge on the lower median-line parallel. A break below this level would likely see accelerated losses with such a scenario targeting support objectives at 1.3036 backed by the 1.29-handle.
GBP/USD 240min Price Chart
Notes: A closer look at Sterling price action sees what could be a bear flag in the works off the May lows with initial resistance targets eyed at 1.3450 backed by 1.3495-1.3504. That said, given the technical considerations made earlier in the week on the US Dollar, we’ll respect a daily close above this threshold with such a scenario targeting the 2017 high close at 1.3589 backed by more significant resistance at 1.3651/75.
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Bottom line: IF the Pound has put in a low, look for support to hold at the weekly open at 1.3345 with our bullish invalidation level at 1.3302- a break below this level would shift the focus back toward confluence support at 1.3182. From trading standpoint, the focus is still higher but we’re looking for a reaction on a stretch into near-term resistance for further guidance.
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GBP/USD IG Client Positioning
- A summary of IG Client Sentiment shows traders are net-long GBP/USD- the ratio stands at -2.28 (69.5% of traders are long) –bearishreading
- Retail traders have remained net-long since Apr 20th; price has moved 5.8% lower since then
- Long positions are 8.0% lower than yesterday and 1.4% lower from last week
- Short positions are 4.3% higher than yesterday and 1.9% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. However, positioning is less net-long than yesterday but more net-long from last week andthe combination of current positioning and recent changes gives us a further mixed GBPUSD trading bias from a sentiment standpoint.
See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!
Relevant GBP/USD Data Releases
Economic Calendar - latest economic developments and upcoming event risk
Other Setups in Play:
- AUD/USD Technical Outlook: Aussie Rebound Testing Key Resistance Hurdle
- USD Threatens June Correction- Dollar Crosses in Focus (Webinar)
- US Dollar Technical Outlook: USD Flies to Fresh Yearly Highs
- EUR/USD Technical Outlook: Are the Euro Tides Shifting?
- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.