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
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
Wall Street
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
Gold
Bearish
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
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
USD/JPY
Mixed
More View more
Real Time News
  • Tune in to @PeterHanksFX 's #webinar at 11:00 AM ET/3:00 PM GMT as he discusses top levels to watch on #DAX, #DOW & more. Register here: https://t.co/Rwbt9aNfIR https://t.co/dsMnt4IKP4
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.72%, while traders in USD/CAD are at opposite extremes with 68.30%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/JVmws5Wbuw
  • #oil demand in India sinks by 70% on lockdown
  • Commodities Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 4.34% Gold: 0.48% Silver: 0.39% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/NKldwbtinl
  • EU approves Hungary's €140 M support for #coronavirus
  • After the drop in GBP/USD last Friday, it has now stabilized close to the 1.23 level rather than the previous 1.24. Get your $GBPUSD market update from @MartinSEssex here: https://t.co/1Tg7dEbYgL https://t.co/BLYL9eP7X1
  • Indices Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Wall Street: 1.14% US 500: 1.09% Germany 30: -0.30% France 40: -0.59% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/0Y3cxfvMgn
  • $USDJPY tests 109.10 as US stock futures rise ahead of market open https://t.co/7h6yrpXbmc
  • Glapinski: - The risk of deflation remains
  • The WTO sees global merchandise trade for 2020 falling anywhere between 13% and 32%
GBP/USD Technical Analysis: Drop After the Pop, Is the Bullish Move Over?

GBP/USD Technical Analysis: Drop After the Pop, Is the Bullish Move Over?

2017-01-18 18:15:00
James Stanley, Strategist
Share:

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

Talking Points:

  • GBP/USD Technical Strategy: Near-term price action showing bullish characteristics,, Long-Term still bearish.
  • Theresa May’s ‘Brexit speech’ propelled Sterling-higher; but already we’re seeing retracement. Does this move have any element of staying power?
  • If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our Speculative Sentiment Index Indicator (SSI).

In our last article, we looked at the continued bearish state in GBP/USD as the pair traded very near the support zone that had developed just after the October flash crash in GBP. While very little was bullish about Cable at the time, the fact that sellers had been previously unable to break significantly below the psychological support zone of 1.2000 was at least somewhat worrisome for bears as the prospect of the Cable having ‘bottomed out’ was a very realistic possibility.

Since then, we’ve seen what many have classified as a short-squeeze on the pair after Theresa May’s Brexit speech yesterday. GBP/USD had moved down to test psychological support shortly after gapping-lower to start the week; but after that support test, the pair rocketed-higher after Theresa May’s Brexit speech gave hope that Brexit may not be as ‘hard’ as what many had feared.

Whether or not this was the start of a fresh bullish trend or short-squeeze retracement from a market caught off-guard has yet to be seen. Price action would need to confirm this bullish formation by setting a higher-low before traders may be able to move forward with bullish trend-continuation prospects.

Just underneath current price action is an opportune zone for such a higher-low to develop between the levels of 1.2201-1.2261. This zone had offered resistance in GBP/USD to close last week, just ahead of the gap-lower on Sunday that ended up testing the 1.2000 handle. This area also has multiple Fibonacci retracements, including the 38 and 50% Fibonacci retracements from the most recent Theresa May-inspired major move. If support can develop at this prior zone of resistance, the door is opened to bullish-continuation strategies. If this support does not hold, traders will likely want to question the sustainability of a further bullish move.

GBP/USD Technical Analysis: Drop After the Pop, Is the Bullish Move Over?

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.