British Pound Technical Forecast: Sterling Recovery on the Ropes
Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD April recovery off support now approaching initial resistance
- Resistance at 1.3931, 1.4024 Key – Support 1.3675, broader bullish invalidation1.35
The British Pound is fractionally higher against the US Dollar early in the week with Sterling attempting to build on last week’s really. While a rebound off technical support leaves room for further near-term gains, the recovery remains vulnerable and we’re on the lookout for possible topside exhaustion just higher. 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 that the GBP/USD pullback was approaching lateral support, “at 1.3675-1.3743 – look for inflection off this zone with a break / close below keeping the focus on confluence support at the May 2020 trendline / 2017 high-week close at 1.3494(area of interest for possible downside exhaustion IF reached).” Cable registered a low at 1.3671 before rebounding sharpy with an advance of more than 1.8% taking price back towards technical resistance at the yearly high-week close at 1.3931.
Key resistance / near-term bearish invalidation steady at 1.3997-1.4024- a region defined by the 2018 high-week close and the 61.8% Fibonacci retracement of the February decline. A break / close below this key support zone would likely fuel another accelerated bout of selling with such a scenario exposing the 2017 high-week close / channel support at ~1.3494- look for a larger reaction there IF reached.
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 rebound may have more upside near-term but the broader risk remains for a deeper correction while below 1.4024. From a trading standpoint, look for signs of topside exhaustion into this zone with a break / close below 1.3675 risking another leg lower in price. Ultimately, a larger pullback may offer more favorable opportunities closer to trend support. I’ll publish an 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 +1.15 (53.53% of traders are long) – neutral reading
- Long positions are6.67% higher than yesterday and 2.74% lower from last week
- Short positions are7.16% lower than yesterday and 16.39% 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.