British Pound Technical Price Outlook: GBP/USD Weekly Trade Levels
- Sterling technical trade level update – Weekly Chart
- GBP/USD Three-week plunge approaching longer-term uptrend support- exhaustion threat
- Weekly resistance 1.2498, 1.1.2754(key) 1.30 – Support 1.2252, 1.2466(critical),1.1950-1.2021
The British Pound has been in free-fall against the US Dollar for three weeks with GBP/USD now down more than 9% year-to-date. The sell-off is now approaching areas of technical interest for possible downside exhaustion and while the broader threat remains lower, the bears may be vulnerable in the days ahead. These are the updated targets and invalidation levels that matter on the GBP/USD weekly chart. Review my latest Strategy Webinar for an in-depth breakdown of this Sterling technical setup and more.
British Pound Price Chart – GBP/USD Weekly
Notes: In last month’s British Pound Technical Forecast we noted that, the GBP/USD collapse was testing a key zone at 1.2754 and that a, “break / weekly close below this technical pivot zone would likely fuel another accelerated decline towards subsequent support objectives at the June 2020 lows at 1.2252 and the May low-week close at 1.2166– both levels of interests for possible downside exhaustion IF reached.” Sterling registered a low at 1.2261 into the weekly open- near-term exhaustion?
It’s too early to tell, but a three-week decline of more than 5% takes price towards long-term uptrend support and we’re looking for possible price inflection down here. Support levels remain unchanged with resistance now 1.2498– bearish invalidation now lowered to the 2018 low-week close / 2019 open a 1.2754. A break / close below 1.2166 would likely fuel another accelerated decline towards the post-Brexit 2016 low / 78.6% Fibonacci retracement at 1.1950-1.2021.
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Bottom Line: The British Pound plunge may be vulnerable in the days ahead as a multi-week decline approaches longer-term technical support. From at trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be capped by last-week’s high IF price is still heading lower on this stretch. I’ll publish an updated Sterling Price Outlook once we get further clarity on the near-term GBP/USD technical trade levels. Stay tuned!
British Pound Trader Sentiment – GBP/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long GBP/USD – the ratio stands at +4.39 (81.46% of traders are long) – typically bearish reading
- Long positions are 3.60% higher than yesterday and 10.77% higher from last week
- Short positions are 15.79% higher than yesterday and 4.35% lower 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. Traders are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed GBP/USD trading bias from a sentiment standpoint.
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— Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex