(MENAFN- DailyFX) GBPUSD Talking Points:
- Theresa May's strategy for a third vote of her Brexit plan to Parliament has been scuttled ahead of the EU summit on the schedule for later this week, injecting additional uncertainty in the already very uncertain matter of Brexit.
- Outside of Brexit, UK inflation numbers are released on Wednesday and the Bank of England has a rate decision on the schedule for Thursday. This is a non-Super Thursday event, so there will not be updated projections and forecasts. But the FOMC rate decision the day before can continue to push USD-volatility, and this can carry impact to GBPUSD .
- DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euro and are available from the DailyFX Trading Guides page . If you're looking to improve your trading approach, check out Traits of Successful Traders . And if you're looking for an introductory primer to the Forex market, check out our New to FX Guide .
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GBPUSD Scales Back to Fibonacci Support Zone
It's been another setback in the continuing Brexit drama as Theresa May's third attempt to gain Parliamentary approval of her plan has been scuttled; leaving the UK in a continued position of inertia as there's little indication of how a final Brexit will actually look. And on that note, we don't even know when this might start to take shape, as PM May's approach this week was largely taken in order to gain Parliamentary approval ahead of this week's EU summit.
On other matters there are a couple of relevant items on the economic calendar out of the UK this week; and in pertinence to the US Dollar side of GBPUSD, an FOMC rate decision waits in the wings for Wednesday . Given the nature of US Dollar price action of recent, with the currency reversing after a test of yearly highs, the tone with which the Greenback trades will likely carry impact in GBPUSD.
On that note, it's been a general tone of strength in GBPUSD over the past week as the US Dollar has continued to pullback from that resistance . GBPUSD opened last week with a test below the 1.3000 handle, but buyers were back in short-order to push prices back up to 1.3289, albeit temporarily. That move soon priced-out and after a quick-test below 1.3050, prices shot up to a fresh nine-month-high, making for a fairly volatile show in short-term price action for last week.
GBPUSD Two-Hour Price Chart Chart prepared by James Stanley
After this morning's news began to circulate that Ms. May would not be sending her plan to Parliament for a third vote, GBPUSD dropped down to a key area on the chart which is currently helping to hold the lows. The price of 1.3187 is the 23.6% Fibonacci retracement of the 2014-2016 major move; and 1.3181 is the 38.2% retracement of the April 2018 January 2019 sell-off.
This confluent zone last came into play in early-March when it helped to set support-turned-resistance; and before that this zone had also helped to hold the highs in January of this year.
GBPUSD Hourly Price Chart Chart prepared by James Stanley
GBPUSD Strategy As discussed in these technical pieces over the past month , near-term volatility in GBPUSD continues to show rather vividly with jagged moves on either side of price. This can make for an especially daunting backdrop to short-term trend or momentum strategies given numerous swings that have been seen of recent. For traders utilizing short-term approaches on GBPUSD, swing trades off of support or resistance levels with relatively tight stops would likely be one of the few attractive ways of approaching the matter.
Below current support, a secondary zone exists from 1.3087-1.3117; and below that is the 1.3000 psychological level which can be incorporated with last week's swing-low to produce a zone that runs from 1.2962-1.3000. Above current prices, the prior support zone from 1.3231-1.3250 could be looked to for near-term resistance; and above that the 1.3290-1.3300 area remains. And a bit-higher is a third zone of potential resistance at those recent highs that runs from 1.3350-1.3381.
GBPUSD Hourly Price Chart Chart prepared by James Stanley
GBPUSD Big Picture
This incorporates the US Dollar into the mix as longer-term trends will likely need some level of participation from both currencies in the pair; but as discussed last week, the longer-term setup in GBPUSD continues to work towards an ascending triangle formation , which will often be approached with the aim of bullish strategies. Last week produced a quick flicker above resistance, thereby making the 1.3350-1.3382 zone a complicated area to begin staging bullish breakout approaches.
But a bit higher is another relevant zone around the 1.3500 handle. The price of 1.3470 is the 38.2% retracement of the 2015-2016 major move; and 1.3478 is the 50% marker of the Brexit move in the pair. At 1.3500 is a major psychological level, making for a batch of resistance that may prove difficult to break without proper motive.
Traders looking at longer-term setups or looking to work with a bigger-picture break of that ascending triangle can look to this key zone on the chart for continuation potential.
GBPUSD Weekly Price Chart Chart prepared by James Stanley
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD -pairs such as EUR/USD , GBP/USD , USD/JPY , AUD/USD . Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator .
Forex Trading Resources
DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you're looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we're looking at what we're looking at.
If you're looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
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