Sterling Outlook: Pound Rebound to be Short Lived- GBP/USD Levels
Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD rebounds off key technical support pivot at 1.2693-1.2754
- Critical resistance 1.3175 – Break lower risks 1.2481
The British Pound is firmer against the US Dollar this week with Sterling up nearly 0.9% after rebounding off a critical support pivot in price. The focus is no a reaction off this technical threshold heading into the open of October / Q4 trade with outlook tilted to the downside while below yearly open resistance. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart. Review my latest 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 to, “be on the lookout for possible topside exhaustion into these upcoming resistance targets – ultimately a larger pullback may offer more favorable opportunities closer to uptrend support with a breach above 1.3335 needed to unleash the next leg higher in Cable.” GBP/USD registered a weekly close high at 1.3349 before faltering with a price plummeting nearly 6% off the September high.
The decline is now testing key support confluence at 1.2693-1.2754- a region defined by the 38.2% retracement of the yearly range, the 2018 low-week close and the 2019 objective yearly open. Note that the May trendline converges on this zone over the next three-week and further highlights the technical significance of this key pivot zone. A break below this threshold would suggest a larger trend reversal is underway with a subsequent support objectives eyed at the June low-week reversal close / 2018 low at 1.2478/81 and the 61.8% Fibonacci retracement at 1.2204.
Initial resistance eyed at 1.2984 backed by 1.3175 and the yearly open at 1.3250- a close above this threshold would be needed to mark resumption of the March uptrend with such a scenario exposing the 2019 high-week close at 1.3335 and critical resistance at the upper parallel (blue) / 2017 high-week close at 1.3494.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom Line: The British Pound price sell-off is now testing a critical medium-term support zone and the immediate focus is on inflection off this threshold. From a trading standpoint, the risk remains for some recovery off this mark but look for topside exhaustion ahead of 1.3175 IF price is heading lower with a break / close sub-1.2693 needed to shift the broader focus back to the downside. 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 +1.17 (53.98% of traders are long) – neutral reading
- Long positions are1.26% higher than yesterday and 6.25% higher from last week
- Short positions are5.85% higher than yesterday and 8.20% 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 less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed GBP/USD 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.