Never miss a story from Michael Boutros

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Michael Boutros

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

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

GBP/USD Price Chart - Daily

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.

New to Forex Trading? Get started with this Free Beginners Guide

GBP/USD 240min Price Chart

GBP/USD Price Chart - 240min

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.

Why does the average trader lose? Avoid these Mistakes in your trading

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

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

GBP/USD Economic Calendar

Economic Calendar - latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Active Trade Setups

- Written by Michael Boutros, Currency Strategist with DailyFX

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