- GBP/USD at risk ahead of EU/UK Brexit talks – price constructive while above monthly open
- Check out our 3Q projections in our Free DailyFX GBP/USD Trading Forecasts
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
The British Pound continues to trade within the weekly opening-range heading into the EU/UK Brexit negotiations. Here are the updated targets and invalidation levels that matter on the GBP/USD charts this week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
GBP/USD Daily Price Chart
Technical Outlook: GBP/USD has been trading within the confines of this descending pitchfork formation extending off the yearly highs – we highlighted the threat of a larger pullback in the British Pound last week as price was carving out an outside-day reversal off the 75% slope line. Note that daily RSI failed at the 60-threshold and further highlights the near-term risk for steeper losses here.
That said, the broader outlook remains weighted to the topside while above the August trendline with initial daily support eyed at the 100-day moving average (currently ~1.31) backed by the October open at 1.3031- we’re on the lookout for downside exhaustion off one of these levels. A topside breach of the monthly range highs looks to challenge more significant resistance at the confluence of the December low, the September highs and the 38.2% retracement at 1.3302/17 and the upper parallel around ~1.3360s.
New to Forex Trading? Get started with this Free Beginners Guide
GBP/USD 240min Price Chart
Notes: A closer look at near-term price action shows Sterling holding a within a clean weekly opening-range just below the 100% extension of the monthly advance at 1.3239. A break below 1.3090 targets confluence support at 1.3031/50- an area of interest for possible long-entries IF reached. Weakness beyond this region would invalidate the monthly advance with such a scenario risking a decline back towards 1.2877-1.2905.
Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading
Bottom line: Sterling has carved out a clear weekly opening-range and we’re looking for the break for offer further guidance. From a trading standpoint, I’ll favor fading weakness while above monthly open support with a breach above 1.3239 needed to fuel the next leg higher in price. Keep in mind there is considerable event risk on the horizon with EU-UK Brexit summit likely to dominate the headlines over the next 48 hours – tread lightly.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
GBP/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long GBP/USD – the ratio stands at +1.28 (51.3% of traders are long) – weak bearishreading
- Traders have remained net-long since September 20th; price has moved 0.2% higher since then
- Long positions are1.0% lower than yesterday and 16.2% lower from last week
- Short positions are 4.5% higher than yesterday and 22.3% 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 and 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 GBP/USD retail positioning are impacting trend- Learn more about sentiment!
Relevant GBP/USD Data Releases
Economic Calendar – latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!
Active Trade Setups
- USD/JPY Technical Outlook: Price Testing Yearly Up-Trend Support
- EUR/USD Price Outlook: Euro Reversal Eyes Initial Resistance Hurdle
- Webinar: Trade Levels for USD Majors, Gold and More amid the Recent Stock Drop
- Gold Price Outlook: Risk Sell-off to Fuel XAU/USD Breakout
– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org