British Pound Price Outlook: Brexit Game Plan Targets Sterling Range

2019-03-12 17:05:00

What's on this page

GBP/USD Daily Price Chart
GBP/USD 120min Price Chart
GBP/USD Trader Sentiment
Relevant GBP/USD Economic Data Releases
Active Trade Setups

GBP/USD carves well-defined monthly opening-range ahead of key Brexit negotiations
Check out our 2019 projections in our Free DailyFX GBP/USD Trading Forecasts
Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT

The British Pound is trading in the middle of a 3% range off the February highs with price setting a well-defined March opening-range against the US Dollar. These are the updated targets and invalidation levels that matter on the GBP/USD charts as the Brexit negotiations continue to dominate the major headlines.

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

GBP/USD Daily Price Chart

GBP/USD Price Chart - British Pound vs US Dollar Daily

Technical Outlook: In my latest GBP/USD Weekly Technical Outlook, we noted that “The threat remains for further loses in the British Pound within the confines of ascending formation we’ve been tracking off the 2018 & 2019 lows.” Sterling dropped into key confluence support at 1.2985/92 (61.8% retracement / 200-day moving average / 25% line) before rebounding sharply with the advance failing just above monthly open resistance yesterday at 1.3262. The move puts the immediate focus on a break of the 1.2985 – 1.3262 range with a breach / close above the December low / February high-day close at 1.3302/07 needed to mark resumption. Broader bullish invalidation for the December advance rests at 1.2754/86.

Learn how to Trade with Confidence in our Free Trading Guide

GBP/USD 120min Price Chart

GBP/USD Price Chart - British Pound vs US Dollar 120min

Notes: A closer look at price action shows Sterling trading within the confines of a descending pitchfork formation extending off the January / February high with price briefly probing above the upper parallel this week before turning over. Key support remains at 1.2985/92 with a break lower exposing the 100-day moving average, currently around ~1.2882, and the yearly open / 61.8% retracement at 1.2754/86- look for a bigger reaction there IF reached (area of interest for possible exhaustion / long-entries). A topside breach of this formation targets subsequent resistance objectives at the July swing-high at 1.3363 and the 50% retracement of the 2018 decline at 1.3409.

Even the most seasoned traders need a reminder every now and then- Avoid these Mistakes in your trading

Bottom line: GBP/USD has carved out a well-defined monthly opening-range and we’re looking for a break amid the barrage of Brexit headlines to offer guidance in price. From a trading standpoint, the threat of a final wash-out lower remains before any meaningful recovery and leaves the risk lower while below the lower parallel / 1.3262. Ultimately, a larger decline may offer more favorable long-entries closer to the median-line. For now, look for a reaction on a retest of the range-extremes. Use caution over the next 48-hours as headlines regarding the revised Brexit deal may fuel excessive volatility in the Sterling crosses. Stay nimble.

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 +1.41 (58.5% of traders are long) – weak bearishreading
Long positions are15.2% lower than yesterday and 0.5% higher from last week
Short positions are 4.8% higher than yesterday and 18.4% 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. Traders are 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 GBP/USD trading bias from a sentiment standpoint.

See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!

---