GBP/USD Technical Analysis: Reversal to Gather Pace
- Cable responds to Fibonacci support- Focus range 1.2360-1.2460
- NEW Real Time Sentiment page !
Chart 1: GBP/USD Daily Timeframe (August 2016 to April 2017)
Cable responded to the 50% retracement of the March advance at 1.2362 this week with the rebound now approaching initial resistance targets. The broader focus remains weighted to the topside while above 1.23 / the lower parallel (blue) with a breach above the monthly open needed to validate a more meaningful reversal targeting confluence resistance at the 200-day moving average at ~1.2630s & key resistance at 1.2675-1.2706.
A closer look at price action highlights immediate resistance at 1.2460 where basic trendline resistance converges on the 38.2% retracement of the decline. The focus is on a break of the 1.2362-1.2460 range with a breach targeting subsequent topside objectives at 1.2519, the monthly open at 1.2540 & 1.2570. From a trading standpoint, I’d favor buying a pullback into structural support around 1.23 or buying a break & re-test of 1.2460 as support. Keep in mind we have the UK labor report on tap tomorrow morning.
Chart 3: GBP/USD Speculative Sentiment Index (October 13, 2016 to April 11, 2017)
A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-long GBPUSD- the ratio stands at +1.16 (53.7% of traders are long)- weak bearish reading:
- Long positions are 7.6% lower than yesterday but 5.6% higher from last week
- Short positions are 17.7% higher than yesterday and 3.3% lower from last week
- Despite the fact retail remains net-long, the recent increase in short positioning continues to highlight the near-term risk to the short-bias, especially as prices continue to hold above upslope support.
--- Written by Michael Boutros, Currency Strategist
Click Here to be added to his email distribution list.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.