Sterling Price Outlook: Pound Contracts Below Critical Resistance
Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD in consolidation within multi-week bullish channel
- Constructive while above 1.2279 – Key resistance 1.2754
The British Pound snapped a two-week winning streak with sterling poised to close 0.51% lower against the US Dollar ahead of the New York close on Friday. Price remains in consolidation just below a critical resistance barrier and we’re looking for a breakout in the days ahead of guidance with the broader rally vulnerable. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart. Review my latest 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 that the GBP/USD had responded to initial support, “at 1.2279 and the threat remains for a larger rebound while above this threshold.” Cable briefly registered a low at 1.2252 before rallying more than 3.3% in the subsequent weeks with price pulling back this week to trade mid-range into the close on Friday.
The focus remains on this price consolidation with critical resistance steady at 1.2717/54- a region defined by the 61.8% retracement of the yearly range and the objective 2019 yearly open. A breach / close above is needed to mark resumption towards the yearly high-week close at 1.3078. Initial support rests with the May trendline, (currently ~1.2350s) backed by 1.2279 and the May low-week close at 1.2166- we’ll reserve this as our bullish invalidation level with a close below needed shift the broader focus lower again towards the post-Brexit low / 61.8% retracement at 1.1948/50.
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Bottom Line:Sterling continues to range within a multi-week ascending channel – just below key resistance. From at trading standpoint, we’re looking for a breakout of the 1.2279-1.2754 range for guidance with the broader March rally vulnerable while below. Watch for downside exhaustion ahead of channel support IF price is heading higher with a breach above the June high needed to keep the long-bias viable. 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-short GBP/USD - the ratio stands at -1.14 (46.63% of traders are long) – neutral reading
- Long positions are6.58% higher than yesterday and 1.88% lower from last week
- Short positions are4.19% lower than yesterday and 5.38% lower 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 and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse lower despite the fact traders remain net-short.
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--- 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.