GBPUSD Technical Outlook:
- Cable has room to continue rallying
- Long-term t-line, 200-day may be targeted
For the intermediate-term fundamental and technical outlook on major asset classes, check out the Q3 Forecasts.
GBPUSD has room to continue rallying
The Pound rally versus the Dollar paused for much of last week, but then continued to extend on Friday. This puts GBPUSD in position to challenge the underside of the trendline running up from the October 2016 flash-crash that also happens to connect with the January flash-crash low.
It could very well act as a formidable line of resistance, but the thinking is it will only be a minor speedbump on the way to higher levels.Looking beyond the 2016 trend-line, the focus will become placed on confluent resistance via the trendline off the 2018 high that runs over the March/May peaks and the declining 200-day MA.
Heading into next week traders are left at a bit of a crossroads as fresh longs don’t hold a lot of appeal at this juncture without traders running the risk of getting caught chasing.But existing long positions may want to be given a little wiggle room to see if momentum can continue taking price higher. Shorts don’t have yet the bearish price action needed to warrant astrong stance.
A small digestion period around the 2016 trendline could give a good look for would-be longs. That could change, however, if a hard rejection develops at resistance, thus giving shorts a shot at lower prices. Bottom line, in wait-and-see mode at the moment, but the landscape could change quickly with Brexit headlines a constant threat.
Check out the IG Client Sentiment page to find out how changes in retail positioning could signal the next price move in major markets.
GBPUSD Daily Chart (looking towards t-line, 200-day)
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—Written by Paul Robinson, Market Analyst
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