Technical Focus: Major GBP/USD Move; Where Now?
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GBP/USD made a major move today. The cross surged through significant technical barriers including the 200 day average and the center line (median line) of the channel that is defined by the 2014-2015 trendline. In the process, Cable broke higher from a 6 month triangle pattern. Triangle patterns are typically resolved in the direction of the prior trend but there are no ‘always’ in trading. One mustn’t be dogmatic in their interpretation of price pattern. Those that were regarding the sideways pattern in GBP/USD hopefully learned their lesson.
Futures volume was the highest (1 day) since the day of the January low (January 17th). The only other higher 1 day volume reading (in my data history at least) was the day of Brexit. After such massive participation, it’s not uncommon to see a period of ‘back and fill’ in order to correct near term excesses before the broader move (up) resumes.
Highs from December 2016 at 1.2774, February at 1.2705, and March at 1.2615 should be marked as levels to join the bullish effort is the market allows. The measured objective from the 6 month triangle breakout is 1.3563. Subtract the January low (1.1986) from the December 2016 high (1.2774) and add that figure to the December 2016 high (breakout level). The math produces 1.3563, which is just above the post-Brexit recovery high of 1.3479.
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