- A look at the weekly technicals as the GBP/USD responds to confluence support
- Check out our 2018 GBP/USD projections in our Free DailyFX Trading Forecasts
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. The British Pound has responded to a long-term weekly technical support confluence on the back to today’s Bank of England (BoE) interest rate decision and the focus is on validation of a larger reversal in price. Here are the key levels that matter on the GBP/USD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
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GBP/USD Weekly Price Chart
Notes: The British Pound has continued to trade within the confines of the descending pitchfork formation highlighted in our previous GBP/USD Technical Perspective, with prices rebounding off a confluence support zone this week around ~1.3164. This region is defined by the 50% retracement of the post-Brexit advance and converges on the lower median-line parallel & basic trendline support extending off the 2017 lows. So was that the low?
The verdict is still - but as noted in this month’s Sterling Scalp Report, this sure is a good spot to look. Interim resistance stands with the 50-line, currently around ~1.3350s backed by more significant resistance at 1.3470/94 where the 52-week moving average converges on the 2017 high-week close and the median-line. A breach there would be needed to suggest a more significant low is in place.
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Bottom line: Sterling is attempting to post and outside-day reversal off confluence support today and we’re looking for follow-through on this rebound. From a trading standpoint, I’ll favor fading weakness against today’s low for now. A break lower would invalidate the reversal play with such a scenario targeting subsequent support objectives at the October lows at 1.3027 and the key 61.8% Fibonacci retracement at 1.2877.
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GBP/USD IG Client Positioning
- A summary of IG Client Sentiment shows traders are net-long GBP/USD- the ratio stands at +2.25 (69.2% of traders are long) –bearishreading
- Traders have remained net-long since April 20th; price has moved 6.6% lower since then
- The percentage of traders net-long Sterling is now its lowest since Jun 14
- Long positions are 9.0% lower than yesterday and 2.3% higher from last week
- Short positions are9.0% higher than yesterday and 13.5% 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 and compared with last week. 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 GBP/USD retail positioning are impacting trend- Learn more about sentiment!
Relevant GBP/USD Data Releases
Economic Calendar– for the latest economic developments and upcoming event risk
Previous Weekly Technical Perspectives
- Weekly Technical Perspective on the New Zealand Dollar (NZD/USD)
- Weekly Technical Perspective on the Canadian Dollar (USD/CAD)
- Weekly Technical Perspective on the US Dollar (DXY)
- Weekly Technical Perspective on the Aussie (AUD/USD)
- Weekly Technical Perspective on the Euro (EUR/USD)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org