British Pound Technical Forecast: GBP/USD Weekly Trade Levels
- British Pound breakout of multi-month downtrend- rallies to nine-week
- GBP/USD rally testing initial resistance hurdle- constructive above weekly-open
- Sterling resistance 1.2397-1.2459, 1.2633, 1.2720/73– Support 1.2226, 1.2084-1.2113, 1.1841
The British Pound surged more than 1.6% this week with GBP/USD building on a breakout of the July downtrend. The rally has now extended nearly 3.9% off the October lows and takes Sterling into the first major technical hurdle. While the medium-term outlook remains constructive, the immediate advance may be vulnerable here and we’re on the lookout for possible inflection off this mark in the weeks ahead. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart.
British Pound Price Chart – GBP/USD Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView
Technical Outlook: In last month’s British Pound Weekly Forecast we noted that GBP/USD was, “trading within a well-defined range just above key support– price has now tested both support & resistance and keeps the focus on a breakout of the 1.2084-1.2397 range for directional guidance. From a trading standpoint, the bears are vulnerable while above the yearly open…” Sterling ripped higher into the November open with the rally now testing a major resistance hurdle- watch the close here.
The focus is on a reaction into this confluence zone at 1.2397-1.2459- a region defined by the January & May high-week closes and the 38.2% retracement of the July decline. A breach / weekly close above this threshold is needed to fuel the next leg higher in price towards subsequent resistance objectives at the May high close at 1.2633 and the 61.8% Fibonacci retracement / February 2019 low at 1.2720/73- look for a larger reaction there IF reached.
Monthly-open support rests at 1.2153 with key support steady at the yearly open / low-week close at 1.2084-1.2113 - ultimately, a break / weekly close below this threshold would be needed to mark downtrend resumption towards the January lows at 1.1841.
Bottom line: The British Pound breakout is now testing the first major resistance hurdle and the immediate advance may be vulnerable while below. From a trading standpoint, the focus is on possible price inflection here- a good region to reduce portions of long-exposure / raise protective stops – losses should be limited to the weekly-open at 1.2226 IF price is heading higher on this stretch with a weekly close above 1.2459 needed to keep the immediate advance viable. Review my latest British Pound Short-term Outlook for a closer look at the near-term GBP/USD technical trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on Twitter @MBForex