British Pound Technical Forecast: Bullish
The British Pound set a fresh three-year-high against the US Dollar this week. And while that statement does stand on its own to a degree, the context is far less clean, as that push up to a fresh high merely brought a quick pullback that’s, so far, equated that fresh high as a false breakout. Elsewhere, it was a slow grind in the British Pound against both the Yen and the Euro, even despite the recent trend of GBP-strength that’s shown visibly in both pairs.
In GBP/USD, the pair came into the week with four consecutive weeks of gains. But, a familiar trendline has reared its ugly head again, as the same support trendline that held the lows from November through March showed up as resistance in May. Price action has continued to rub on the underside of this trendline for over a month now, with the initial resistance inflection showing on April 20th around the 1.4000 spot.
GBP/USD Daily Price Chart
Despite this looming overhead resistance, GBP/USD remains somewhat bullish on shorter time frames, similar to what I had looked at in last Wednesday’s webinar. If USD-weakness does show in a pronounced manner, the topside of the pair can remain as attractive as price action as been range-bound near resistance for a few weeks already.
As I had shared in that webinar, this can allow for range strategies to take on a prior trend-side bias. The forecast for GBP/USD will be set to bullish for the week ahead. I had also looked into GBP/USD in the recently posted Analyst Pick.
GBP/USD Technical Forecast: Bullish
GBP/USD Four-Hour Price Chart
GBP/JPY Stalls as Resistance Comes into Play
GBP/JPY has been similarly strong, with the past five weeks producing gains in the pair until this week finally saw a bit of resistance show up. The pair broke above the 155 psychological level last week and this week appeared to highlight buyers trying to garner support around this level. But – each of those support bounces started to show a diminishing impact, leading to the build of a descending triangle formation.
Such patterns will often be approached with the aim of bearish breakouts, and this could produce a slightly deeper pullback in the pair. The forecast will be set to neutral for GBP/JPY for the week ahead.
Technical Forecast for GBP/JPY: Neutral
GBP/JPY Four-Hour Price Chart
EUR/GBP Snagged at Confluent Support
There may be some reversal potential in EUR/GBP for the week ahead, largely on the basis of a hold at a really big spot of support. But, similar to the shorter-term support looked at above in GBP/JPY, each of those support bounces have brought a diminishing impact, leading to the build of a descending triangle, which is often approached with the aim of bearish breakouts.
The support zone that came into play again this week plots from .8566-.8581, produced by two different Fibonacci retracements. But, the key observation from this week is that the test of this support zone produced a higher-low from what showed on the last test.
So, a hold at a key support zone coupled with a higher-low are both bullish factors while the descending triangle is a bearish indication. Given this divergence the forecast for EUR/GBP will be set to neutral for the week ahead.
EUR/GBP Technical Forecast: Neutral
EUR/GBP Four-Hour Price Chart
— Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX