- GBP/USD carves monthly opening range just below slope resistance- breakout pending
- Check out our 3Q projections in our Free DailyFX GBP/USD Trading Forecasts
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The British Pound recovered off the August support line with prices now threatening yearly down-slope resistance early into the start of October / 4Q trade. Here are the updated targets and invalidation levels that matter on the GBP/USD charts this week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
GBP/USD Daily Price Chart
Technical Outlook: We’ve been tracking this descending pitchfork in GBP/USD for months now with false-break of the lower parallel last week charging a recovery back above the median-line. Note that daily RSI held above 40 on the most recent pullback and keeps momentum on the side of the bulls for now. Initial resistance stands at the 61.8% retracement at 1.3155 with a breach / close above the 38.2% slope line needed to keep the long-bias in play.
Daily support rests with the monthly open at 1.3031 and is backed closely by trendline confluence around the 1.30-handle. Ultimately a break below the 1.2877-1.2905 support zone would be needed to mark resumption of the broader downtrend.
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GBP/USD 240min Price Chart
Notes: A closer look at price action highlights the August trendline (red) and keeps our near-term focus weighted to the topside while above 1.30. Initial resistance targets are eyed at 1.3122 and targets 1.3155/65- a breach there is needed to fuel the next leg higher with such a scenario targeting 1.3213 and more significant resistance at 1.3290-1.3302.
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Bottom line:The British Pound has set its weekly / monthly opening-range just below slope resistance and we’re looking for a breakout of the 1.29-1.3165 zone to validate our medium-term outlook. From a trading standpoint, I’ll favor fading weakness in Sterling while above 1.30 targeting a breach above daily slope resistance.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
GBP/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +2.0 (66.7% of traders are long) – bearishreading
- Traders have remained net-long since September 20th; price has moved 0.6% lower since then
- Long positions are1.8% lower than yesterday and 5.0% higher from last week
- Short positions are 1.0% lower than yesterday and 8.5% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. That said, traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias from a sentiment standpoint.
See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!
Relevant GBP/USD Economic Data Releases
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at email@example.com