ICmarkets
Short

GBP Weekly technical outlook and review...

FX:GBPUSD   British Pound/U.S. Dollar
210 0 6
Weekly timeframe perspective: Like the Euro             , the GBP was also very active last week. A 280-pip move south was seen from just below a recently broken weekly Quasimodo support (now resistance) line coming in at 1.5007, consequently engulfing the prior week’s candle and forcing Cable to close at 1.4630. As per the weekly timeframe , we believe further selling may be in store this week for the following reasons:

• The recent move on the pound has, as far as we can see, consumed most of the major buyers around the low 1.4634, thus potentially clearing the path down to at least the weekly demand area seen at 1.4225-1.4482.
• This pair is still in a freakishly steep downtrend at the moment.

Daily timeframe perspective: The daily chart shows that price broke below daily demand at 1.4643-1.4823 last week. This move has likely opened the window to further downside towards daily demand at 1.4343-1.4465, which is located within the weekly demand area that we just talked about above.

4he timeframe perspective: The recent decline in value seen on the pound forced prices down into a round-number supportive structure coming in at 1.4600, which, as you can see, was defended into the close.

Given that both the weekly and daily timeframes are suggesting further selling may take place (see above), where does this leave us on the 4hr timeframe? Well, for anyone looking to buy the momentum off of 1.4600 today, the most we see price rallying to is the small 4hr decision-point supply area at 1.4723-1.4704, which not only coincides nicely the round-number 1.4700, but is also the position where we believe pro money made the decision to push below daily demand at 1.4643-1.4823 on Friday - so all in all, a pretty significant area.

We’re not confident enough to be buyers in this market, so today’s task is waiting - waiting to see if price can indeed reach this 4hr decision-point supply area. In the event that it does, we’re going to be looking to short heavily as we feel the move from here could be considerable. However, to deal with any possible fakeout above this area, corresponding lower timeframe confirmation will need to be seen before we commit capital to this idea.

Incidentally, if price does not reach this area, and simply closes below 1.4600, we’ll then shift our attention to watching for price to retest this number as resistance, since the runway south will then likely be free down to test 1.4500 – forty or so pips above the daily demand area mentioned above at 1.4343-1.4465.

Current buy/sell orders:

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

• Sell orders: 1.4723-1.4704 (Predicative stop-loss orders seen at: 1.4728).

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