(MENAFN - DailyFX) GBP/USD weekly technicals Sterling breakdown targeting uptrend support Check out our 2019 projections in our Free DailyFX GBP/USD Trading Forecasts Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. Sterling is down more than 3.3% against the US Dollar from the yearly high with price breaking below a multi-month consolidation last week. These are the updated targets and invalidation levels that matter on the GBP/USD weekly price chart. Review this week's Strategy Webinar for an in-depth breakdown of this setup and more.
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GBP/USD Weekly Price Chart Notes: In last month's GBP/USD Weekly Technical Outlook we noted that the, 'risk remains weighted to the downside heading into the close of the month / quarter but ultimately the broader outlook remains constructive while above yearly open support at 1.2754. A break below the 61.8% line of the ascending pitchfork formation and a multi-week consolidation last week has fueled a drop towards parallel support and we're looking for a reaction just lower.
Slope support is eyed at ~1.2860 backed closely by 61.8% retracement at 1.2801 and the yearly open at 1.2754- a break / close below this threshold would be needed to validate resumption of the broader downtrend targeting the 2016 low-week close / 78.6% retracement at 1.2433/69. Initial resistance stands with the April open at 1.3036 backed by the 1.33-handle a breach / close above this threshold would shift the focus back to the long-side targeting the median-line and the 2017 high-week close / 200-week moving average at ~1.35.
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Bottom line: Sterling has broken a multi-week consolidation pattern with the decline now approaching broader pitchfork support. From a trading standpoint, the immediate risk is lower but we're looking for a reaction on a stretch into structural support- a good spot to reduce short-exposure / lower protective stops - look for a reaction / possible price exhaustion there IF reached. I'll publish and updated GBP/USD Price Outlook once we get further clarity in near-term price action.
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GBP/USD Trader Sentiment A summary of IG Client Sentiment shows traders are net-long GBP/USD - the ratio stands at +2.66 (72.7% of traders are long) bearish reading traders have remained net-long since March 26th; price has moved 2.0% lower since then Long positions are 7.6% lower than yesterday and 10.5% higher from last week Short positions are 12.5% higher than yesterday and 7.5% higher from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Sterling prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week andthe combination of current positioning and recent changes gives us a further mixed GBP / USD trading bias from a sentiment standpoint. See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!
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--- Written by Michael Boutros , Technical Currency Strategist with DailyFX
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