Sterling Price Outlook: Pound Rebounds off Support– GBP/USD Levels
Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD rebounds off confluence Fibonacci support
- March rally remains viable while above 1.2166 – Key resistance 1.2754
The British Pound opens July trade on firm footing with Sterling up more than 0.5%against the US Dollar this week. The advance comes on the heels of a rebound from Fibonacci support and keeps the March rally viable for now while above this week’s low. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Cable trade setup and more.
Sterling Price Chart - GBP/USD Weekly
Notes: In my last Sterling Weekly Price Outlook we noted that the GBP/USD was, “testing the first major resistance barrier early in the month and leaves the immediate advance vulnerable while below 1.2754 near-term.” Cable failed to mark a daily / weekly close above this threshold with price briefly registering a high at 1.2813 before reversing sharply lower. Sterling has fell more than 4.3% off the June highs before responding support this week at the 38.2% retracement of the March rally at 1.2279- the focus is on this zone as we head into the July open.
Weekly resistance stands with the 61.8% retracement of the June range at 1.2599 with critical resistance steady at 1.2717/54. Ultimately a breach / close above the 61.8% extension at 1.2840 would suggest a larger trend reversal may be underway in Sterling. A break lower from here eyes the May low-week reversal close at 1.2166- a close below this threshold would be needed to mark a resumption of the broader downtrend with such a scenario exposing subsequent support objectives at the 61.8% retracement of the March rally / 2016 post-Brexit low at 1.1948/50.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom Line: The Sterling sell-off has responded to initial support here at 1.2279 and the threat remains for a larger rebound while above this threshold. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops – look for topside exhaustion ahead of the 1.26-handle IF price is indeed heading lower. Ultimately we’ll be on the lookout for a low above 1.1950 for the March rally to remain viable. I’ll publish and updated Sterling Price Outlook once we get further clarity on 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 +1.41 (58.58% of traders are long) – bearish reading
- Long positions are3.15% lower than yesterday and 26.46% higher from last week
- Short positions are5.77% lower than yesterday and 7.69% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias from a sentiment standpoint.
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--- 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.