Sterling Price Outlook: British Pound Surges- Bulls Face First Test
Sterling Technical Price Outlook: GBP/USD Trade Levels
- Sterling technical trade level update – Daily & Intraday Charts
- GBP/USD surges off key support zone after failed attempt to break below 1.29
- British Pound recovery targeting downtrend / Fibonacci resistance ~1.3080
The British Pound surged more than 1.1% against the US Dollar this week with Sterling poised to mark the fourth consecutive daily advance. The rally takes GBP/USD towards the first major hurdle at down-trend resistance just higher and we’re looking for a reaction. These are the updated targets and invalidation levels that matter on the GBP/USD price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Cable trade setup and more.
Sterling Price Chart – GBP/USD Daily
Technical Outlook: In my latest Sterling Price Outlook we noted that the recent sell-off was approaching, “a critical support zone just below the January lows- the immediate focus is on a reaction off the 1.2900/20 support zone with the short-bias vulnerable while above.” Cable briefly registered a low at 1.2870 early in the week before reversing sharply higher with the advance taking GBP/USD back above the 1.2990pivot zone. The focus is on confluence resistance at 1.3080 with a breach / close above the upper parallel needed to shift the focus back to the topside. Daily support steady at 1.29 with a break lower exposing 1.2823.
Sterling Price Chart – GBP/USD 120min
Notes: A closer look at Sterling price action shows GBP/USD continuing to trading within the confines of a near-term descending pitchfork formation extending off the late-December / February highs. An embedded ascending channel formation keeps the near-term focus higher while above today’s lows. Note the resistance confluence around 1.3080 where the upper parallel converges on the 61.8% retracement of the monthly range – look for a reaction there IF reached with a topside breach needed to keep the long-bias viable targeting monthly open resistance at 1.3176. Ultimately, a break below weekly-open support at 1.2894 would be needed to mark resumption of the broader downtrend.
Bottom line: The Sterling recovery is approaching confluence downtrend resistance just higher and we’re looking for a reaction on a stretch towards 1.3080 for guidance. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of parallel resistance with a breach / close above needed to keep the long-bias in play. Review my latest British Pound Weekly Price Outlook for a closer look at the longer-term GBP/USD technical trade levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Sterling Trader Sentiment – GBP/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +1.85 (64.86% of traders are long) – bearish reading
- Long positions are 6.04% lower than yesterday and 1.19% lower from last week
- Short positions are16.51% higher than yesterday and 4.83% 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 – from a sentiment standpoint, the recent changes in positioning warn that the current GBP/USD price trend may soon reverse higher despite the fact traders remain net-long.
Key UK / US Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Trade Setups
- Euro Price Outlook: EUR/USD Spirals into Support– Trade Levels
- Australian Dollar Price Outlook: Aussie Bears Stalls- Reversal Risk
- Gold Price Outlook: XAU/USD Bulls Eye Trend Resistance- GLD Levels
- Canadian Dollar Price Outlook: USD/CAD Breakout Testing Resistance
- S&P 500 Price Outlook: SPX500 Rally Targets Fresh Yearly Highs
- Bitcoin Price Outlook: BTC/USD Rally Falters- Crypto Trade Levels
- Written by Michael Boutros, 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.