Sterling Price Chart: British Pound Testing Post-Brexit Support
- GBP/USD testing critical confluence support at 1.2374-1.2433 – Focus is on the weekly close
- Check out our 2019 projections in our Free DailyFX Sterling Trading Forecasts
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The British Pound is down near 0.75% against the US Dollar this week with Sterling testing a major support confluence just below the January lows. These are the updated targets and invalidation levels that matter on the GBP/USD weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.
GBP/USD Price Chart - Sterling Weekly
Notes: In my last GBP/USD Price Outlook we highlighted that, “Sterling has preserved the monthly opening-range heading into the final days of June with price failing today at yearly open resistance. From a trading standpoint, the risk is for correction off this threshold – watch today’s close, an outside-day reversal would further highlight the near-term threat for a move lower in the British Pound.” A break below the June range-lows early in the month has seen Cable drop to two-year lows with price now testing a key support confluence.
The zone in focus is 1.2374-1.2433 – a region defined by the 2016 post-Brexit low-week close and the 2017 low-week close. Note that channel support also converges on this threshold and further highlights its technical significance. A break / weekly close below would expose subsequent support objectives at the 61.8% extension at 1.2185. Monthly open resistance stands at 1.2695 with broader bearish invalidation steady at 1.2754/64 (critical) where the objective 2019 open converges on the 38.2% retracementof the yearly range – a breach there would shift the focus towards the February low-week close at 1.2888.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: Sterling is a testing a critical support zone this week and from a technical standpoint, leaves the broader short-bias at risk while above 1.2374. From a trading standpoint, a good spot to reduce short exposure / lower protective stops. Be on the lookout for downside exhaustion here – I’ll publish an updated Sterling Price Outlook once we get further clarity in near-term GBP/USD price action.
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Sterling Trader Sentiment (GBP/USD)
- A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +3.57 (78.1% of traders are long) – bearish reading
- Traders have remained net-long since May 6th; price has moved 3.3% lower since then
- Long positions are 7.8% lower than yesterday and 5.8% lower from last week
- Short positions are 3.5% lower than yesterday and 19.4% higher 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. Yet traders are less net-long than yesterday & compared with last week and the recent changes in sentiment warn that the current GBP/USD price trend may soon reverse higher - despite the fact traders remain net-long.
See how shifts in Sterling retail positioning are impacting trend- Learn more about sentiment!
Key UK / US Data Releases
Previous Weekly Technical Charts
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.