ICmarkets
Short

GBP/USD: Weekly technical outlook and review...

FX:GBPUSD   British Pound/U.S. Dollar
191 0 2
Weekly view: Cable posted a moderate gain of 115 pips by the close 1.5306 last week. This, as you can see, pushed market action back up into the jaws of supply drawn from 1.5658-1.5425 (converges with trendline resistance from the high 1.7190). A break above this barrier this week would likely force price to touch gloves with a swap resistance level seen at 1.5733. Meanwhile, a push lower from this supply could see price connect with channel support extended from the low 1.4564.

Weekly levels to watch this week fall in at: 1.5658-1.5425/1.5733/Channel support.

Daily view: From this angle, we can see that price responded positively to demand coming in at 1.5199-1.5245 on Thursday. Consequent to this, relatively aggressive follow-through buying was seen on Friday, taking out offers sitting around a minor supply area at 1.5358-1.5306, and almost crossing swords with a swap resistance hurdle at 1.5484 before slightly selling off into the weekend. Therefore, both this resistance level and the demand zone mentioned above are definitely worth noting on your watch lists for this week’s trade.

Daily levels to watch this week fall in at: 1.5199-1.5245/ 1.5484.

4hr view: As we already mentioned above, Friday’s action was heavily bid. From this timeframe, both the closely-linked swap resistance levels at 1.5384/1.5373 were taken out, along with psychological resistance 1.5400, reaching highs of 1.5467 on the day before pulling back to lows of 1.5411 by the week’s end.

Pushing forward, this morning’s gap higher of 26 pips at 1.5547 made very little difference to the overall structure of this market. Taking into consideration that current action on the weekly timeframe is kissing the underside of supply at the moment, and price is relatively close to touching gloves with a swap resistance level on the daily timeframe (see above), buying this market today/early this week could be risky. That being the case, we’re ultimately eyeing the following zones for shorts:

• Quasimodo resistance at 1.5477. This is the last fresh barrier of offers left in the market until psychological resistance 1.5500. Therefore, it is likely going to bounce price when or indeed if we see a touch of this level (confirmation required).

• Supply at 1.5528-1.5510. Given that the round number 1.5500 is lurking just below this area, we believe this number will be faked should price reach this high. Traders are likely looking at how well 1.5500 held from the 15th to the 22nd of October and likely believe it will do so again (and it might). However, there is a high probability well-funded traders will fake this number to collect stops, and at the same time, this will stab into fresh orders above at near-term supply. Due to where this area is positioned on the higher timeframe picture on both the daily and weekly timeframes (see above), we have set a pending sell order at 1.5506 with a stop above at 1.5532.

Levels to watch/ live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1.5477 Tentative – confirmation required (Stop loss: dependent on where one confirms this level) 1.5506 (Stop loss: 1.5532).
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