ICmarkets
Long

Our take on the pound this week...

FX:GBPUSD   British Pound/U.S. Dollar
153 0 3
Weekly gain/loss: - 28 pips
Weekly closing price: 1.3261

Weekly view: Following three weeks of gains, the GBP/USD             printed a clear-cut bearish selling tail last week just ahead of a resistance area coming in at 1.3501-1.3804. This, along with the predominant bearish trend currently in place, could force cable back down to support at 1.2942 this week.

Daily view: From this angle, candle action             rotated beautifully from the underside of a supply zone last week drawn from 1.3533-1.3426, which happens to be glued to the underside of the aforementioned weekly resistance area . While support could form from around the recently broken highs at 1.3240ish (see black arrow), the support area seen below penciled in at 1.3064-1.3104 appears to be the more attractive zone to bring price to this week.

H4 view: In a similar fashion to that of the EUR/USD             , the GBP also collapsed following comments made by Fed member Eric             Rosengren. In consequence to this, the 1.33 handle was consumed, allowing price to shake hands with the lower edge of the H4 support area seen at 1.3290-1.3242 by the week’s end.

Direction for the week: Apart from the possibility that support may form on the daily chart around the 1.3240 range, the pound is likely going to eventually depreciate down to at least the daily support area mentioned above at 1.3064-1.3104.

Direction for today: Well this is tricky since our analysis for the week portends a drop in prices, and from the H4 we see a highly confluent buy zone currently in play. Along with price now treading water within the above said H4 support area , we see a H4 mid-level support at 1.1250, a H4 50.0% Fib support around the same level, a H4 support at 1.3261 and to top it off there’s a H4 AB=CD bullish completion point also seen around the 1.1250ish range.

Our suggestions: Given the above H4 confluence and the possibility of daily support forming around 1.3240, we feel buying from the current H4 buy zone is certainly worth a shot. To be on the safe side, nevertheless, we would advise liquidating some of the position around the 1.33 handle and reducing risk to breakeven, since getting caught on the wrong side of weekly flow (see above) would not be a pretty sight for one’s account!

Levels to watch/live orders:
• Buys: 1.3261 region (Stop loss: 1.3235).
• Sells: Flat (Stop loss: n/a).
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