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Sterling Technical Forecast: British Pound Stalls– GBP/USD at Big Spot

Sterling Technical Forecast: British Pound Stalls– GBP/USD at Big Spot

Michael Boutros, Strategist

Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels

  • Sterling technical trade level update – Weekly Chart
  • GBP/USD breakout rally vulnerable into key resistance at yearly high
  • Resistance at 1.4036-1.43 - Support 1.40, broader bullish invalidation1.3675
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The British Pound is attempting to mark a fourth consecutive weekly advance again the US Dollar with GBP/USD stalling just below critical resistance at the yearly highs. The advance is marred by weekly momentum divergence and suggests the advance may be vulnerable in the days ahead. 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

Sterling Price Chart - GBP/USD Weekly - British Pound vs US Dollar Trade Outlook - Cable Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; GBP/USD on Tradingview

Notes: In my last Sterling Weekly Price Outlook we noted that the GBP/USD rally had stalled at key resistance and that the, “threat remains for a deeper correction within the confines of the 2020 uptrend while below the 1.40-handle.” Our technical outlook was invalidated one week later with a breach / close above resistance at the 2018 high-week close / 61.8% Fibonacci retracement of the February decline at 1.4000/24 fueling another run at a critical pivot zone at the 2018 high-close / 50% retracement at 1.4236-1.43- once again we are at key resistance.

Initial weekly support now rests back at the 1.4000/24 backed by the objective monthly open at 1.3819- both levels of interest for possible downside exhaustion IF reached. Broader bullish invalidation raised to channel support / the Brexit-gap at 1.3675. A topside breach / close above the 1.43-handle exposes subsequent resistance objectives at the 2018 swing high at 1.4377– beyond this threshold the first level of influence comes in at 1.4745!

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 rally may be vulnerable here into resistance at the objective yearly highs – from a trading standpoint, a good zone to reduce long-exposure / raise protective stops. We’re looking for possible price inflection off this region -watch the weekly close for guidance. Ultimately a larger pullback may offer more favorable entries closer to uptrend support with a breach / close above 1.43 needed to mark resumption of the broader uptrend in the British Pound. 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

Sterling Trader Sentiment - GBP/USD Chart - British Pound vs US Dollar Retail Positioning - Cable Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-short GBP/USD - the ratio stands at -1.65 (37.67% of traders are long) – typically bullish reading
  • Long positions are1.70% higher than yesterday and 10.76% higher from last week
  • Short positions are8.99% higher than yesterday and 1.25% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Traders are more net-short than yesterday but less net-short 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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Key UK / US Economic Data Releases

Key UK / US Economic Data Release - GBP/USD Weekly Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- 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.

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