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Home Technical Analysis

Pound Rebound Remains Precarious- GBP/USD Levels

Forex Tips by Forex Tips
October 19, 2020
in Technical Analysis
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GBP/USD, EUR/GBP and FTSE 100 Prices and Outlooks
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Sterling Technical Price Outlook: GBP/USD Weekly Trade Levels

  • Sterling technical trade level update – Weekly Chart
  • GBP/USD rebound vulnerable while below yearly open resistance
  • Key resistance 1.3175-1.3250 – Critical support 1.2693-1.2754

The British Pound is up more than 0.4% against the US Dollar into the weekly open but keeps Sterling within the confines of a key price range we’ve been tracking for weeks now. The weekly rebound may have some steam near-term but the broader risk still remains tilted to the downside with the immediate focus on a break of a key price range. 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.

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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 GBP/USD was, “testing a critical medium-term support zone and the immediate focus is on inflection off this threshold.” The zone in focus was 1.2693-1.2754– a region defined by the 38.2% retracement of the yearly range, the 2018 low-week close and the 2019 objective yearly open. A rebound off this key zone in late September gathered pace into the October open with Sterling rallying more than 3.2% off the recent lows.

The recovery failed last week at the 50% retracement (high registered at 1.3084) – a pullback off this mark keeps the focus on a break of the 1.2693-1.3080 range for guidance with the broader weighted to the downside while below critical resistance at 1.3175/1.3250– a region defined by the 61.8% Fibonacci retracement of the September range / 2018 decline and the 2020 yearly open. A break / close below key support at 1.2693-1.2754 is needed to mark resumption of the broader downtrend with such a scenario exposing the June low-day close / 2018 low at 1.2478/81.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom Line:Last week’s British Pound price reversal keeps the focus on a break of the recent range for guidance with the broader risk still lower below the yearly open. From a trading standpoint, “the risk remains for some recovery off this mark but look for topside exhaustion ahead of 1.3175 IF price is heading lower with a break / close sub-1.2693 needed to shift the broader focus back to the downside. I’ll publish and updated Sterling Price Outlook once we get further clarity on the near-term GBP/USD technical trade levels.”

GBP Forecast

GBP Forecast

Recommended by Michael Boutros

Download our latest quarterly GBP/USD Price Forecast

Sterling Trader Sentiment – GBP/USD Price Chart

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

  • A summary of IG Client Sentiment shows traders are net-short GBP/USD – the ratio stands at -1.57 (38.96% of traders are long) – bullish reading
  • Long positions are1.85% lower than yesterday and 16.77% lower from last week
  • Short positions are29.90% higher than yesterday and 0.24% higher 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 further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias from a sentiment standpoint.



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 1% 29% 16%
Weekly -9% 1% -3%

—

Key UK / US Data Releases

Key UK / US Data Releases - GBP/USD Economic Calendar - Key Event Risk

Economic Calendar – latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

Forex for Beginners

Forex for Beginners

Recommended by Michael Boutros

New to Forex Trading? Get started with this Beginners Guide

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex





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