The British Pound is down near 0.75% against the US Dollar this week with Sterling testing a major support confluence just below the January lows. These are the updated targets and invalidation levels that matter on the GBP/USD weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.
New to Forex Trading? Get started with this Free Beginners Guide
GBP/USD Price Chart – Sterling Weekly
Notes: In my last GBP/USD Price Outlook we highlighted that, “Sterling has preserved the monthly opening-range heading into the final days of June with price failing today at yearly open resistance. From a trading standpoint, the risk is for correction off this threshold – watch today’s close, an outside-day reversal would further highlight the near-term threat for a move lower in the British Pound.” A break below the June range-lows early in the month has seen Cable drop to two-year lows with price now testing a key support confluence.
The zone in focus is 1.2374-1.2433 – a region defined by the 2016 post-Brexit low-week close and the 2017 low-week close. Note that channel support also converges on this threshold and further highlights its technical significance. A break / weekly close below would expose subsequent support objectives at the 61.8% extension at 1.2185. Monthly open resistance stands at 1.2695 with broader bearish invalidation steady at 1.2754/64 (critical) where the objective 2019 open converges on the 38.2% retracementof the yearly range – a breach there would shift the focus towards the February low-week close at 1.2888.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: Sterling is a testing a critical support zone this week and from a technical standpoint, leaves the broader short-bias at risk while above 1.2374. From a trading standpoint, a good spot to reduce short exposure / lower protective stops. Be on the lookout for downside exhaustion here – I’ll publish an updated Sterling Price Outlook once we get further clarity in near-term GBP/USD price action.
Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading
Sterling Trader Sentiment (GBP/USD)
- A summary of IG Client Sentiment shows traders are net-long GBP/USD – the ratio stands at +3.57 (78.1% of traders are long) – bearish reading
- Traders have remained net-long since May 6th; price has moved 3.3% lower since then
- Long positions are 7.8% lower than yesterday and 5.8% lower from last week
- Short positions are 3.5% lower than yesterday and 19.4% higher 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. Yet traders are less net-long than yesterday & compared with last week and the recent changes in sentiment warn that the current GBP/USD price trend may soon reverse higher – despite the fact traders remain net-long.
See how shifts in Sterling retail positioning are impacting trend- Learn more about sentiment!
Key UK / US Data Releases
Economic Calendar – latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!
Previous Weekly Technical Charts
Learn how to Trade with Confidence in our Free Trading Guide
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex