GBP/USD Update: Tricky…

There is a significant conflict on various time frames, making the outlook particularly interesting. Intraday the trend is bullish, daily the trend is negative and the weekly trend is basing.

The daily chart shows a struggle at the cloud resistance and first retracement around 1.3055. Rallying beyond this level is expected, thus opening the road towards 1.3320 and perhaps even a tat higher. Even though this initially means an extension of the daily counter trend move (i.e. bear market rally), it substantially increases the odds of a successful long-term base and thus chances of a major bullish reversal of the long-term trend.

As said the situation is highly interesting, but very hard to trade effectively. USD is still strong but losing ground elsewhere and potential to the upside is extremely large in case of a bullish reversal (1.45+). Overall we suggest significantly decreasing GBP-short exposure and prepare strategies for a bullish reversal over the coming weeks and months.

For ourselves, we will start buying after: a break above 1.3120 and the setting of a new base somewhere around/above 1.3035. In this scenario the odds are too much in the bulls favour to disregard. Not easy, but very interesting.

  • Near term trend: negative
  • Long term trend: neutral/basing
  • Outlook: conflicting time frames, potential trend reversal
  • Strategy: decrease or close shorts and monitor closely
  • Support: 1.3035 / 1.2690 / 1.2340*
  • Resistance: 1.3120 / 1.3320 / 1.3690*+
  • Outlook cancelled/neutralized: n/a

Daily chart British Pound / US Dollar (GBP/USD)

7 May 2018 –  Sell the rallies

The (weekly) trend breach suggested late April has materialized. The high momentum move gives the breakout more credibility that a prolonged and deeper correction is ahead. A minor bounce as a reaction to the sell-off is of course always possible, but our focus has shifter to the sell-side rather the speculating a bounce/recovery.

On the upside trailing resistance comes in at 1.3735 and 1.3815. Needless to say these will move along if the markets sets new lows over the coming hours. Key down side levels are found on the weekly charts around 1.3325 (down side projection) 1.3220 and then 1.2820. More useful intermediate levels can be calculated once an intraday recovery has panned out.

  • Near term trend: negative
  • Long term trend: moderately negative
  • Outlook: deeper correction likely, negative
  • Strategy: sell the rallies
  • Support: 1.3325 / 1.3220 / 1.2820
  • Resistance: 1.3735 / 1.3815
  • Outlook cancelled/neutralized above 1.3815

420-minute intraday chart British Pound / US Dollar (GBP/USD)