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GBP/USD Stuck in Wedge/Triangle- Retail FX Remains Long Ahead of BoE

GBP/USD Stuck in Wedge/Triangle- Retail FX Remains Long Ahead of BoE

David Song,

Talking Points:

- GBP/USD to Threaten Triangle/Wedge Formation on Hawkish Bank of England (BoE) Minutes.

- Australian Dollar Rebound at Risk on Slowing Core Inflation- 0.7500 Resistance Remains in Focus.

- USDOLLAR Preserves Bullish Formation- 10-Day SMA Continues to Offer Support.

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GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Recent string of lower highs & lows in GBP/USD raises the risk for a further consolidation as it remains stuck in the wedge/triangle formation carried over from the previous month; waiting for a close above near-term resistance around 1.5630 (38.2% retracement) to 1.5650 (38.2% expansion) to favor a further advance.
  • Even though the Bank of England (BoE) retains its current policy in July, the meeting minutes may boost the appeal of the sterling should the policy statement highlight a growing dissent within the committee.
  • Nevertheless, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD coming into July, with the ratio approaching extremes as it climbs to +1.64, with 62% of traders long.


AUD/USD Daily Chart
  • Limited market reaction to the Reserve Bank of Australia (RBA) Minutes favors a bearish outlook for AUD/USD as price & RSI preserve the downward trends, but the pair may make a more meaningful assault at near-term resistance around 0.7500 (61.8% expansion) as the momentum indicator continues to come off of oversold territory.
  • Beyond expectations for an uptick in the headline reading for Australia’s Consumer Price Index (CPI), a marked slowdown in the core rate of inflation may drag on the exchange rate as it fuels speculation for a RBA rate cut.
  • Will favor the approach to sell-bounces as long as the bearish formations stay intact, with the next downside region of interest comes in around 0.7240 (100% expansion).

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Read More:

Price & Time: USD/JPY Struggles Higher

Is EURUSD Repeating a pre-euro Trading Pattern?

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12000.4712056.7511996.28-0.36111.42%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Another failed attempt to close above 12,049 (78.6% retracement) may generate a larger pullback in the Dow Jones-FXCM U.S. Dollar, but will retain a constructive view on the greenback as the 10-Day SMA (11,991) offers near-term support.
  • Forecasts for another 0.9% expansion in U.S. Existing Home Sales may boost speculation for September liftoff as a growing number of Fed officials prepare households and businesses for higher borrowing-costs; will keep a close eye on the central bank rhetoric coming out at the July 29 interest rate decision.
  • Topside targets remain favored with 12,082 (61.8% expansion) on the radar, but a failure to retain the bullish formation may spur a move back towards former resistance around 11,898 (50% retracement) to 11,901 (78.6% expansion).

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--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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