GBP/USD Trends Higher in the Short Term
- GBP/USD Trends Higher in the Short Term
- Market Sentiment Remains Neutral; IG Client Sentiment Reading at -1.07
- Looking for additional trade ideas for the Pound? Read our 2017 Market Forecast
The GBP/USD is currently trading off of weekly highs and the pair is potentially set to close higher for the third consecutive session this week. With this week’s advance, the pair may technically be considered in a short term uptrend. As seen in the image below, the GBP/USD is now trading above its 10 day EMA (exponential moving average) at 1.2456. If prices continue to trend higher, traders may reference this line as a value of ongoing support, and look for the pair to next approach the 200 day MVA (simple moving average) which is found at 1.2542.
In the event that the US Dollar begins to firm, traders should first look for the GBP/USD to trade back below its 10 day EMA. A move below 1.2456 would suggest a short term shift in momentum for the pair, opening the GBP/USD to retest weekly lows found at 1.2366. In the event of a bearish breakout to new weekly lows, longer term GBP/USD traders may begin targeting the March 2017 low of 1.2109.
GBP/USD, Daily Chart with Averages
Sentiment analysis for the GBP/USD shows that traders are nearly evenly split between long and short positions. Currently IG ClientSentiment for the GBP/USD reads at -1.07, with 52% of traders short the GBP/USD. Despite having a mixed reading, traders should continue to monitor sentiment for any shifts in the ratio. If the GBP/USD breaks out higher, traders should reasonable expect IG Client Sentiment to move toward new negative extremes. Alternatively, if the GBP/USD reverses lower, traders may look for sentiment totals to flip back to a net long reading.
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--- Written by Walker, Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.