Sterling Price Outlook: British Pound Breakout Stalls-GBP/USD Levels
- British Pound September rally remains vulnerable- broader outlook constructive above 1.2582
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Sterling was on the defensive this week with the British Pound down more-than 0.5% against the US Dollar ahead of the New York close on Friday. The losses keep price within the confines of a multi-week range we’ve been tracking with the broader advance still vulnerable into the final week of November trade. 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 Loonie price setup and more.
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Sterling Price Chart - GBP/USD Weekly
Chart Prepared by Michael Boutros, Technical Strategist; GBP/USD on Tradingview
Notes:In last my last Sterling Weekly Price Outlook we noted that GBP/USD, “The Sterling breakout may be losing some steam here and while the outlook remains constructive, the near-term advance remains vulnerablehere into the Bank of England (BoE) interest rate decision tomorrow. From a trading standpoint, look for downside exhaustion on a stretch lower – possible entries on a test of the yearly open or lower while above 1.2582.”
The outlook remains the same nearly two weeks later with Cable holding within a multi-week range just above yearly open support at 1.2754. Critical support and broader bullish invalidation for the September rally remains with the 2018 low-week close at 1.2582. Initial resistance steady at the 78.6% retracement of the yearly range at 1.3077 backed by a more significant resistance confluence at 1.3168-1.3203- look for a larger reaction there IF reached.
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Bottom line:Sterling continues to range just above the yearly open and the focus for now remains on a break of this near-term congestion zone. From a trading standpoint, taking a more neutral stance here -for now, be on the lookout for possible exhaustion / long-entries on a move towards the lower support objectives. Ultimately a breach / close above this week’s high is needed to mark resumption. I’ll publish an updated Sterling Price Outlook once we get further clarity on the near-term GBP/USD technical trade levels.
Sterling Trader Sentiment - GBP/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +1.38 (57.94% of traders are long) – weak bearish reading
- Long positions are10.44% higher than yesterday and 1.53% higher from last week
- Short positions are 18.18% lower than yesterday and 8.36% 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 and 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!
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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
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