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
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