GBP/USD Breakout Exhaustion- Cable Levels

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Sterling (GBP / USD) Technical Price Outlook: Neutral

  • Sterling technical business level update – Weekly Chart
  • GBP / USD a breakout meets a key technical convergence at the 52-week moving average
  • Weekly resistance 1.3746 (key), 1.3835 – support 1.3567, 1.3494-1.3529 (key)

The British Pound has now risen more than 4.3% from the December 2021 low against the British Pound US dollar with GBP / USD extending into confluent technical resistance on Thursday. The advance may be vulnerable here in the coming days and we will be looking for support next week to validate this possible price breach. These are the updated targets and invalid levels that are important on the GBP /US dollar weekly chart. Review my last Webinar Strategy for a deep break from this Sterling technique layout and more.

Sterling Price Chart – GBP / USD Weekly

Sterling Technical Forecast: GBP / USD Breakout Exhaustion - Cable Levels

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

Notes:In my last Sterling Technical Forecast we noticed that GBP / USD was approaching weekly resistance at, “the upper parallel of the decline fork we tracked the highs of 2021 / swing of 2017 high at 1.3658– a break / week close above this threshold is necessary to keep the immediate accumulation feasible with such a scenario exhibiting confluence resistance around the 52-week moving average near ~1.3750s. ” A break above yesterday recorded a high today at 1.3749 – a time for exhaustion?

The focus is on possible short-term flexion here with the immediate advance vulnerable while down. Weekly support rests with the high week closing of 2017/2022 open annually at 1.3494-1.3529 – A weekly close below this threshold would suggest that this may have been a larger outflow and would shift the focus to a resumption for the broader low. Top break / close above this key resistance a threshold is needed to validate a larger reversal with such a scenario exposing the 61.8% Fibonacci retracement of the May decline at 1.3835 and the high week 2018 closes at 1.3997 – both areas of interest for possible upper exhaustion IF achieved.

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

Bottom line:Sterling has extended into confluence resistance and while this break threatens further advance, the immediate build-up could be vulnerable as long as below 1.3746- watch the weekly close. From a business point of view, a good zone to reduce long exposure / raise protective stops – losses should be limited to the low February at 1.3567 IF price increases in this stretch. I will release an updated Sterling Price Outlook after we get more clarity on the upcoming GBP / USD technical trading levels.

Sterling Merchant Sentiment – GBP / USD Price Chart

Sterling Technical Forecast: GBP / USD Breakout Exhaustion - Cable Levels

  • Summary of IG Customer Sense shows that traders are net-short GBP / USD – the ratio stands at -1.59 (38.54% of traders are long) – usually bullish legacy
  • Long positions are 1.52% higher than yesterday and 13.57% lower than last week
  • Short positions are4.63% higher than yesterday and 37.73% higher than last week
  • We usually take the opposite view of crowd sentiment, and the fact that traders are net short suggests that GBP / USD prices will continue to rise. Traders are sharply shorter than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger GBP / USD bullish uptrend. I feel standpoint.

UK / US Economic Calendar

Sterling Technical Forecast: GBP / USD Breakout Exhaustion - Cable Levels

Economic Calendarlatest economic developments and upcoming event risk.

Previous Weekly Technical Letters

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex



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