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The delcine is approaching technial support into the 1.27 region- shorts at risk into this level Check out our GBPUSD quarterly projections in our Join Michael for Live Weekly Strategy Webinars on Daily Chart
Technical Outlook: Last week we highlighted that ‘GBP/USD has been trading within the confines of an ascending dating back to last year with an outside-day reversal at the highs shifting our focus lower earlier this month. Prices broke below slope support today with the decline now testing the .'
Prices sat on that level into the close of the week with a break yesterday now targeting more significant structural support at the December high / lower parallel at 1.2760/75- a level of interest for possible exhaustion. A break below this threshold would risk a drop towards the 200-day moving average / 50% retracement at 1.2628/45.
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GBP/USD 120min
Notes: A closer look at price action shows cable trading within an embedded descending channel with the upper parallel converging on the weekly open at 1.2867-a breach above this region would be needed to mark a near-term reversal in the pair with such a scenario eying initial targets at1.2949.
That said, the immediate risk is lower and from a trading standpoint, I would be looking for a dip into the lower parallel for possible exhaustion / long-entries. A break below 1.27 would suggest the larger construct has been compromised and would keep the broader downside bias in play targeting 1.2641 & 1.2616.
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A summary of shows traders are net-long GBPUSD- the ratio stands at +1.21 (54.7% of traders are long) weak bearish reading Long positions are 8.9% higher than yesterday and 9.1% higher from last week Short positions are 8.6% higher than yesterday and 2.3% higher from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bearish contrarian trading bias. See how shifts in retail positioning are impacting trend-
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- Written by Michael Boutros, Currency Strategist with DailyFX Follow Michael on Twitter or contact him at .
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