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British Pound Trend Points Lower But Confirmation Needed to Short

British Pound Trend Points Lower But Confirmation Needed to Short

Ilya Spivak, Head Strategist, APAC

TECHNICAL FORECAST FOR THE BRITISH POUND: NEUTRAL

  • British Pound down trend resumption stalled below 1.28 figure
  • Near-term resistance held but bearish continuation unconfirmed
  • Opportunities to enter short sought on counter-trend line break

See our free guide to get help gain confidence in your British Pound trading strategy!

The British Pound found interim support in the 1.2715-75 area against its US counterpart after resuming the dominant multi-year downtrend in late April. This barrier marked former resistance at the top of a congestion range containing prices from October 2016 to April 2017.

British Pound Trend Points Lower But Confirmation Needed to Short

Zooming in to the daily chart, resistance guiding the near-term down move established in early July has held up in the face of an initial challenge. Counter-trend support set from the August 15 low remains in force however, suggesting is too early to conclude that bearish resumption is at hand.

A break below this threshold confirmed on a daily closing basis would imply the next leg lower is in progress, opening the door for a challenge of initial support in the 1.2662-69 zone (August swing bottom, 38.2% Fibonacci expansion).

Alternatively, another foray to the upside that takes prices above the 38.2% Fib retracement at 1.2929 might defuse immediate downside pressure and open the door for a larger recovery. The next upside barrier in this scenario is marked by the 50% level at 1.3012.

British Pound Trend Points Lower But Confirmation Needed to Short

On balance, an actionable trade setup is absent for now as the narrowing gap between immediate support and resistance makes for adverse risk/reward parameters. Still, the trend bias is firmly bearish, arguing for a short-side preference in evaluating opportunities.

Tactically speaking, that translates to waiting for confirmation on a clear-cut break of the countertrend line support to enter short. Whether the opportunity to execute occurs from here or following a larger correction upward remains to be seen.

Other Weekly Technical Forecasts:

EUR/USD: Euro Bouncing or Reversing?

USD: Dollar Fails to Launch Major Technical Breakout, Reversal Risk Rising Rapidly

AUD/USD: Prices May Consolidate as Downtrend Remains Intact

USD/JPY:DollarBreakout Drives Higher to Test Resistance

BRITISH POUND TRADING RESOURCES

--- Written by Ilya Spivak, Sr. Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivakon Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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