Sterling Price Targets: GBP/USD Rejected at Resistance- Trade Outlook
Sterling is down nearly 1% on the week after turning from downtrend resistance. Here are the levels that matter on the GBP/USD weekly chart heading into September.
- British Pound recovery fails at trend resistance- looking for possible exhaustion ahead of 1.2080
- Check out our 2019 projections in our Free DailyFX GBP/USD Trading Forecasts
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Sterling prices are softer this week after testing downtrend resistance on Tuesday and although the risk remains for a deeper drive from here, the bears aren’t quite in control just yet. Here These are the updated targets and invalidation levels that matter on the GBP/USD weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.
Sterling Price Chart - GBP/USD Weekly
Notes:In last week’s GBP/USD PriceOutlook we noted that Sterling was testing downtrend resistance at the “median-line of the descending pitchfork formation we’ve been tracking off the late-2018 / 2019 highs- converges on the 2016/2017 slope line around ~1.2315.” Cable registered a high at 1.2310 this week before turning lower with price set to close the week down more than 0.9%.
The focus heading into September trade is whether Sterling can find meaningful support on this pullback to suggest that the August turn may have some legs. Looking for a low ahead of the low-day close at 1.2081 IF Cable is indeed heading higher here- weakness beyond this level would risk a test of the post-Brexit lows at 1.1950.
Key resistance stands a the 2017 / 2016 low-week closes at 1.2374-1.2433- a breach / close above this zone would be needed to suggest larger correction is underway with such a scenario targeting the 38.2% retracement of the yearly range at 1.2537.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line:Sterling turned from downtrend resistance this week at the median-line and we’re looking for support into the September open. From a trading standpoint, the risk is lower but be on the lookout for a low / downside exhaustion ahead of 1.2081 for early in the week for possible entries – ultimately a breach above 1.2433 is needed to keep the August advance viable. Review my latest GBP/USD Price Outlook for a closer look at the near-term GBP/USD technical trading levels.
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Sterling Trader Sentiment (GBP/USD)
- A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +2.23 (69.0% of traders are long) – bearish reading
- Traders have remained net-long since May 6th; price has moved 6.2% lower since then
- Long positions are3.8% higher than yesterday and 4.2% higher from last week
- Short positions are 9.1% lower than yesterday and 5.2% lower 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. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias from a sentiment standpoint.
See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!
Previous Weekly Technical Charts
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.