GBP/USD: Technical outlook and review.

FX:GBPUSD   British Pound / U.S. Dollar
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Weekly Timeframe: Last week saw the British pound take a tumble resulting in the weekly demand area seen at 1.58533-1.60157 being broken. This move potentially opens the gates for price to challenge 1.57166, a strong-looking weekly resistance flip level. That being said, we have to take into consideration the fact that price did not actually close below this area, this may in itself indicate a fakeout may have taken place to gather liquidity for higher prices. Let’s take a look on the lower timeframes to see what we can find.

Daily Timeframe: The daily timeframe shows that price reacted off of a fresh daily rally-base-rally demand area at 1.57736-1.58390, indicating that the small break of the weekly demand area (see above) may well have been a fakeout. We feel there is a good chance that higher prices will likely be seen from here this week. Are we not concerned about the small daily support flip level at 1.58736? Normally we would be. However, in this case we’re not. Here’s why, check out the tail seen at 1.58674, this consumed all the buy orders to allow prices to drop in the first place, and as a result minimal transactions likely took place around this minor swap level, meaning there are very likely not many unfilled sell orders here to repel the market. The unfilled sell orders will likely be lurking above, around the 1.60210-1.59700 area (daily supply). This is where we believe the selling begun – the origin of the move and this is where we feel prices will trade to sometime this week.

4hr Timeframe: The 4hr timeframe shows that price reacted beautifully off of a 4hr demand area at 1.57736-1.58110 (located deep within the aforementioned daily rally-base-rally demand area). What it also shows is that before price can reach the aforementioned daily supply area, we have to be prepared for some selling opposition to be seen around 1.59 (tentative sell orders are seen just below at 1.58972). In the event that price breaks above 1.59, which we believe it will, we can likely assume higher prices will be seen up to at least a small 4hr supply area at 1.60008-1.59822 (located deep within the aforementioned daily supply area). This could present a fantastic opportunity to play the retest, targeting the 4hr supply area just mentioned above.

Buy/sell levels:

• Buy orders: N/A (Predicative stop-loss orders seen at: N/A).

• Sell orders: 1.58972 (Predicative stop-loss orders seen at: 1.59321).

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