Sterling Price Outlook: Pound Surges into Critical Fibonacci Resistance
Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD rally holding below confluent resistance at 1.2717/54
- Broader Cable outlook remains constructive while above 1.2328
The British Pound rallied more than 2.6% against the US Dollar this week with the advance now taking Sterling more than 11% off the March lows. Price is testing the first major resistance hurdle here at a key technical confluence and while the medium-term risk remains weighted to the topside, the advance may be vulnerable while below this threshold. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Cable trade setup and more.
Sterling Price Chart - GBP/USD Weekly
Notes:In my last Sterling Weekly Price Outlook we noted to keep a lookout for possible, “downside exhaustion while above 1.1950,” with a topside breach exposing, “subsequent resistance objectives at the 2018 low-week close at 1.2582 and a key technical confluence at 1.2717/54- a region defined by the 61.8% retracement and the 2019 yearly open.” Price registered a high at 1.2732 this week and leaves the long-bias vulnerable while below this threshold near-term.
Initial support rests back at 1.2582 with near-term bullish invalidation now raised to this week’s low at 1.2328 - a close below the March trendline would threaten a larger correction in Sterling. A breach higher from here exposes subsequent resistance objectives at the 61.8% extension of the late-March advance at 1.2840 backed by the 75% parallel (currently ~1.2890s) and the yearly high-week close at 1.3078.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom Line: The Sterling rally is testing the first major resistance barrier early in the month and leaves the immediate advance vulnerable while below 1.27545 near-term. From a trading standpoint, a good region to reduce long-exposure / riase protective stops – look for downside exhaustion ahead of 1.2328 IF price is head higher with a breach / close above 1.2840 needed to mark resumption. I’ll publish and 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 -1.46 (40.65% of traders are long) – bullish reading
- Long positions are7.90% lower than yesterday and 31.45% lower from last week
- Short positions are12.56% lower than yesterday and 26.08% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Yet, traders are less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias from a sentiment standpoint.
Key UK / US Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Previous Weekly Technical Charts
- Japanese Yen (USD/JPY)
- US Dollar (DXY)
- Canadian Dollar (USD/CAD)
- Euro (EUR/USD)
- Gold (XAU/USD)
- Mexican Peso (USD/MXN)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.