Sterling Forecast: GBP/USD Coils at Support- Cable on Breakout Watch
Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD July opening-range carved just above uptrend support– pending breakout
- Key resistance / bearish invalidation at 1.4024, Key Support 1.3675
The British Pound was softer against the US Dollar into the close last week with GBP/USD down more than 0.8% ahead of the New York close on Friday. The losses keep Sterling within the July opening-range – just above long-term uptrend support. 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 Sterling technical setup and more.
Sterling Price Chart - GBP/USD Weekly
Notes:In last month’s Sterling Weekly Price Outlook we highlighted that the GBP/USD pullback was testing “key support at 1.3670/75” and to be on the lookout for, “topside exhaustion below 1.4155 with a break / close sub-1.3675 needed to fuel the next leg lower in price.” Cable has continued to contract just above median-line support (blue) of a broader ascending pitchfork formation extending off the 2016 / 2020 lows for the past four weeks – we’re on breakout watch.
Key confluence support remains at with the median-line of the embedded, descending formation presented last month / the 2016 Brexit gap at 1.3675 – a break / close below is still needed to fuel the next leg lower with such a scenario exposing the 52-week moving average at 1.3534 and the 2017 high-week close at 1.3494. Resistance remains with the 75% parallel (this week’s high) with bearish invalidation now lowered to the 2018 high-week close / 61.8% Fibonacci retracement at 1.4000/24.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom Line:Sterling remains caught up in a contractionary range just above uptrend support – look for a break of the monthly opening-range for guidance. From a trading standpoint, the broader risk remains lower sub-1.40 with a break / weekly close below 1.3675 needed to fuel the next leg lower in the British Pound.
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-long GBP/USD - the ratio stands at +1.64 (62.15% of traders are long) – typically bearish reading
- Long positions are1.88% lower than yesterday and 12.60% lower from last week
- Short positions are9.62% lower than yesterday and 0.64% 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. Yet traders are more net-long than yesterday but less net-long from last week. The combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias from a sentiment standpoint.
Previous Weekly Technical Charts
- Euro (EUR/USD)
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- US Dollar Index (DXY)
- Gold (XAU/USD)
- Crude Oil (WTI)
- New Zealand Dollar (NZD/USD)
- Japanese Yen (USD/JPY)
- Australian Dollar (AUD/USD)
--- 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.