British Pound Technical Forecast: GBP/USD Recovery


British Pound Technical Price Outlook: GBP/USD Weekly Trade Levels

  • Sterling technical trade degree replace – Weekly Chart
  • GBP/USD rebound off downtrend assist threatens check of downtrend resistance
  • Weekly resistance, 1.2166, 1.2348, 1.2520– Support 1.1861 (key), 1.1650, 1.1414

The British Pound is trying to mount a second weekly advance in opposition to the US Dollar after rebounding sharply off technical assist early within the month. While the potential for additional near-term good points stays, the restoration retains worth inside the yearly downtrend and the main focus is on a potential stretch in direction of resistance ranges simply increased for steering. These are the up to date targets and invalidation ranges that matter on the GBP/USD weekly chart heading into the Fed fee determination / shut of July. Review my newest Strategy Webinar for an in-depth breakdown of this Sterling technical setup and extra.

British Pound Price Chart – GBP/USD Weekly

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

Notes: In my final British PoundWeekly Technical Forecast we famous that the GBP/USD was approaching a key, “support pivot into the start of the month and the focus is on possible price inflection off this mark. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be capped by monthly open resistance at -1.2173 IF price is indeed heading lower on this break.” Sterling continued to register a low at 1.1760 on July 14th (amid constructing weekly divergence) earlier than rebounding off downtrend assist (pink channel) with GBP/USD rallying almost 2.8% off the lows. The focus is on this bear-market restoration with the FOMC rate of interest determination on faucet heading into the shut of the month.

Initial weekly resistance eyed on the May 2020 low-week shut at 1.2166 backed by the 23.6% Fibonacci retracement of the 2021 decline / late-May weekly reversal-close at 1.2348. Broader bearish invalidation now lowered to the highlighted area across the 38.2% retracement at 1.2520. A break / shut under the low-week shut at 1.1861 is required to mark resumption of the broader downtrend with such a state of affairs exposing subsequent assist goals on the 2020 shut low (1.1650) and the 2020 lows at 1.1414.

For an entire breakdown of Michael’s buying and selling technique, overview his Foundations of Technical Analysis sequence on Building a Trading Strategy

Bottom Line: The British Pound has rebounded off downtrend assist and leaves room for additional near-term good points inside the broader decline– rallies ought to be restricted to yearly channel resistance IF worth continues to be certainly heading decrease on this stretch. From a buying and selling standpoint, be looking out for potential topside exhaustion forward of 1.2348 with a weekly shut under 1.1861 wanted to clear the best way for the subsequent leg decrease in worth. Keep in thoughts the FOMC rate of interest determination is on faucet this week adopted by US GDP and Inflation (PCE) knowledge with the shut of the month upon us- anticipate some volatility, tread flippantly and keep nimble.

British Pound Trader Sentiment – GBP/USD Price Chart

British Pound Trader Sentiment - GBP/USD Price Chart - Sterling Retail Positioning - Cable Technical Forecast

  • A abstract of IG Client Sentiment exhibits merchants are net-long GBP/USD – the ratio stands at +2.25 (69.27% of merchants are lengthy) – sometimes bearish studying
  • Long positions are 1.29% increased than yesterday and 1.16% decrease from final week
  • Short positions are 33.54% increased than yesterday and 19.45% increased from final week
  • We sometimes take a contrarian view to crowd sentiment, and the very fact merchants are net-long suggests GBP/USD costs might proceed to fall. Yet merchants are much less net-long than yesterday and in contrast with final week. From a sentiment standpoint, the latest adjustments in positioning warn that the present GBP/USD worth pattern might quickly reverse increased regardless of the very fact merchants stay net-long.

UK / US Economic Calendar

UK / US Economic Calendar - British Pound Key Data releases - GBP/USD Weekly Event Risk

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— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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