Sterling Outlook: Pound Rally Falters at Resistance- GBP/USD Levels
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Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD rebound vulnerable while below yearly open resistance
- Critical resistance 1.3250 – Key support 1.2919
The British Pound is virtually unchanged againstthe US Dollar this week with GBP/USD trading at 1.3161 ahead of the close of New York trade on Friday. Sterling probed multi-month highs this week before faltering with price now trading back below a critical resistance range we’ve been tracking for months- the bulls are on notice. 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 while the near-term focus was on the GBP/USD recovery, the “broader outlook weighted to the downside while below critical resistance at 1.3175/1.3250- a region defined by the 61.8% Fibonacci retracement of the September range / 2018 decline and the 2020 yearly open.” The British Pound rally briefly registered a high at 1.3313 this week before reversing sharply with GBP/USD poised to closed unchanged on the week.
A weekly close below this threshold would leave the recent recovery vulnerable heading into next with initial weekly support at the May channel / 61.8% retracement at 1.2919. A break / close below 1.2693-1.2754 would be needed to mark resumption of the broader downtrend. A topside breach from here keeps the focus on the 2019 high-week close at 1.3335 and critical resistance at the upper parallel (blue) / 2017 high-week close at 1.3494 – a close above this multi-year descending pitchfork formation would suggest a more significant trend reversal is underway in the British Pound.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom Line:A rally of more than 4.4% off the September lows takes Sterling into a key resistance pivot at the yearly open. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops – be on the lookout for possible topside exhaustion into 1.3250 with the broader advance vulnerable while below. Ultimately a larger correction may offer more favorable opportunities closer to uptrend support. Review my latest Sterling Price Outlook for a closer look at 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 -1.48 (40.4% of traders are long) – weak bullish reading
- Long positions are19.74% higher than yesterday and 19.74% higher from last week
- Short positions are16.67% lower than yesterday and 0.12% 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 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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- Gold (XAU/USD)
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- Canadian Dollar (USD/CAD)
--- 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.