British Pound (GBP/USD) Price Technical Outlook: Neutral

• Sterling Trade Level Technical Update – Weekly Chart
• GBP/USD the breakout is hitting a key technical confluence 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 jumped more than 4.3% from the December 2021 low against the American dollars with GBP/USD stretching into confluent technical resistance on Thursday. The advance could be vulnerable here in the coming days and we will be looking for support next week to validate this potential price breakout. It’s the updated targets and invalidation levels that count on the GBP/USD weekly chart. Review my last Strategy Webinar for a detailed analysis of this sterling technique setup and more.

Pound Sterling Price Chart – GBP/USD Weekly

Chart prepared by Michel Boutros, technical strategist; GBP/USD on Tradingview

Remarks:In my last British Pound Technical Forecast we noted that the GBP/USD was approaching the weekly resistance at the “upper parallel of the decline fork we tracked the highs of 2021/2017 at 1.3658– A weekly break/close above this threshold is needed to keep the immediate rally viable with such a scenario exposing confluent resistance around the 52-week moving average near ~1.3750s.” A break up yesterday recorded a high today at 1.3749 – time for exhaustion?

The focus is on a possible near-term inflection here with the immediate advance vulnerable below. Weekly Support rests with the closing of the high week 2017 / 2022 annual opening at 1.3494-1.3529 – A weekly close below this threshold would suggest that this may be a bigger runout and shift the focus to the resumption of the broader downtrend. A gap at the top / close above this key resistance threshold is needed to validate a larger reversal with such a scenario exposing the 61.8% Fibonacci retracement of the May decline to 1.3835 and the closing of the 2018 high week at 1.3997 – the two areas of interest for a possible surface depletion IF reached.

For a full analysis of Michael’s trading strategy, see his Fundamentals of Technical Analysis Series on Bbuild a Jrading Sstrategy

Conclusion:The Pound stretched into confluent resistance and while this breakout threatens a bigger advance, the immediate rally may be vulnerable below 1.3746 – watch for the weekly close. From a trade perspective, a good area to reduce long exposure / increase protective stops – losses should be limited to February lows at 1.3567 The IF price is heading higher on this stretch. I will post an update to the GBP price outlook once we have more clarity on the GBP/USD’s short-term technical trading levels.

British Pound Traders Sentiment – GBP/USD Price Chart

• A summary of IG Customer Sentiment shows traders are net-short GBP/USD – ratio stands at -1.59 (38.54% of traders are long) – generally bullish reading
• Long positions are 1.52% more than yesterday and 13.57% less than last week
• Short positions are4.63% more than yesterday and 37.73% more than last week
• We generally take a contrarian view of crowd sentiment, and the fact that traders are net short suggests that GBP/USD prices may continue higher. Traders are even sharper than yesterday and last week, and the combination of current positioning and recent changes gives us a contrarian bullish GBP/USD trading bias stronger by one feeling point of view.

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— Written by Michel Boutros, Technical Currency Strategist at DailyFX

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