We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • Growth linked currencies have gained as investors hope for progress on the trade front as well as stimulus from the Fed. The global economy however remains depressed and seems likely to remain so. Get your market update from @DavidCottleFX here: https://t.co/jt1HH9AHLM https://t.co/Yz65AMJYlm
  • RT @YuanTalks: #China temporarily suspend additional tariffs of either 10% or 5% on some #US goods scheduled to take effect on Dec 15, said…
  • The gold-silver ratio is simple. It is the number of silver ounces you would need to trade to receive one ounce of #gold at current market prices. Find out how you can use this in your trading strategy here:https://t.co/kh5DZvv5ib $XAUUSD https://t.co/eJGODpfTNc
  • How can traders avoid #FOMO in trading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 https://t.co/DoVBd1l1oO
  • #Silver is a precious metal commodity that investors use as an inflation hedge and safe-haven asset. Find out what are some strategies and tips to trade silver here: https://t.co/k4tVcFuwxW #CommoditieswithDailyFX https://t.co/zXCSmH2HLX
  • Markets are trying to maintain a bullish tilt as a new week rolls around, a look ahead at the charts of the #Dow, #DAX, and #FTSE. Get your technical analysis on major world indices from @PaulRobinsonFX here: https://t.co/bYjRDvQsdM https://t.co/mbg0rUbv3K
  • Trade conflict is clearly awful for the broad world economy, but some countries are already benefiting from it. More stand to do so. Spotting them early could be profitable. Get your update on the #tradewar from @DavidCottleFX here: https://t.co/og0VAPAqwm https://t.co/xB8hYUj4OA
  • #Gold prices may suffer if better-than-expected US economic data and progress on US-China trade negotiations cool 2020 Fed rate cuts and alleviate demand for anti-fiat hedges. Get your $XAUUSD market update from @ZabelinDimitri here: https://t.co/3ula2sUpqL $gld https://t.co/2iZwxcm3wP
  • What's the difference between leading and lagging indicators? Find out from @RichardSnowFX here:https://t.co/vGx8HCagF5 https://t.co/KCZ48rDnhy
  • Why financial market traders must monitor both monetary and fiscal policy? Find out from @MartinSEssex here: https://t.co/Fkzk88Y5gm https://t.co/tTXcw1b7Tp
GBP/USD Technical Analysis: Bullish Despite USD's 13-Year Highs

GBP/USD Technical Analysis: Bullish Despite USD's 13-Year Highs

2016-11-21 17:53:00
James Stanley, Currency Strategist
Share:

To receive James Stanley’s Analysis directly via email, please sign up here.

Talking Points:

  • GBP/USD Technical Strategy: Near-term bullish prospects, higher-low showing at prior resistance.
  • Cable has bounced off of higher-low support, and is currently finding short-term resistance at a key Fibonacci level.
  • If you’re looking for trading ideas, check out our Trading Guides.

In our last article, we looked at the recent ramp-higher in GBP/USD with the question of whether we had established the new higher-low. And while that higher-low ended up digging a bit deeper on the chart, eventually finding support at the 1.2328 zone of prior resistance, the open of this week’s trading has seen another strong Sterling-move as the pair is running-higher.

While a potential trend-change might not be all that exciting given the current global landscape where trends are changing all over the place, the context with which this has been happening should be noteworthy: The U.S. Dollar is in the midst of fresh 13-year highs, and this is showing against most major currencies such as the Yen, Euro, Aussie, etc. But one currency that isn’t playing along is the British Pound, as the GBP/USD is merely working in a series of ‘higher-lows.’

The logic behind ‘why’ this is happening makes sense: After the ‘sharp repricing’ in the value of the British Pound around the Brexit referendum, inflationary pressure would likely begin to build, starting with imported products. And as inflation moves higher, this could force the Bank of England’s hand away from deeper interest rate cuts and even more loose monetary policy; which could drive the value of GBP-higher (removal of rate-cut bets functions similarly to increasing rate hike bets – stronger moves in the currency). The big question was when that inflation might begin to show, and how aggressively, and at that last BoE meeting we saw the bank begin to acknowledge this fact.

So, while the headlines around Brexit may still be threatening and uncertain, price action in GBP/USD has begun to move in a bullish manner after that most recent BoE meeting, forming a series of higher-highs and higher-lows. Price action appears to be working fairly cleanly with a Fibonacci retracement that can be found by taking the high on September 22 to the ‘flash crash’ low. The 61.8% retracement of this move has helped to set intermediate-term resistance at 1.2656, and the 50% retracement of this same move is showing short-term resistance at 1.2513.

With prices finding near-term resistance at this 1.2513 level, which is also near the 1.2500-psychological level, traders will likely want to wait for a stronger advance to push prices higher, at which point this current level of resistance could be near-term support.

GBP/USD Technical Analysis: Bullish Despite USD's 13-Year Highs

Chart prepared by James Stanley

--- Written by James Stanley, Analyst for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.