GBP Technical Analysis

Talking Points:

• GBP/JPY Technical Strategy: Flat
• Support: 188.51, 186.93, 184.37
• Resistance: 189.79, 191.07, 191.97

The British Pound is pushing aggressively lower for second straight day against the Japanese Yen, sinking to touch the lowest level in six weeks. From here, a break below the 61.8% Fibonacci expansion at 188.51 on a daily closing basis exposes the 76.4% level at 186.93.

While aggressive downside momentum looks likely to keep the pair firmly under pressure, thin liquidity conditions elevate the risk of swift intraday reversals. With that in mind, a turn back above the 50% Fib at 189.79 opens the door for a test of the next upside barrier at 191.07, the 38.2% expansion.

An actionable trading opportunity is absent at this point. The absence of confirmation on a daily closing basis means a breach of the 50% Fib can’t be taken as a given. In fact, even if the break were confirmed the pair is too close to the 61.8% barrier to make a short attractive on a risk/reward basis. Alternatively, no viable bullish reversal signal is present to justify taking up the long side. With that in mind, we will continue to monitor developments from the sidelines.




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Talking Points:

• GBP/JPY Technical Strategy: Flat
• British Pound Rallies Most in Two Months Against Japanese Yen
• Standing Aside Until an Actionable Trade Setup Presents Itself

The British Pound is working on a third consecutive day on the upside against the Japanese Yen after putting in the largest daily advance in two months. Prices found support above the 180.00 figure after sliding to the lowest level in over four months.

Near-term resistance is in the 185.37-186.05 area, marked by the September 8 close and the 38.2% Fibonacci retracement, with a break above that on a daily closing basis opening the door for a test of the 50% level at 187.81. Alternatively, a move below resistance-turned-support at 183.88, the 23.6% Fib, clears the way for a challenge of the 14.6% retracement at 182.53.

An actionable trade setup is absent at this point. Prices are too close to resistance to justify entering long from a risk/ward perspective. On the other hand, the absence of a defined bearish reversal signal suggests taking up the short side is premature thus far. We will stand aside for now, waiting for a more attractive opportunity to present itself.

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Talking Points:

• GBP/USD Technical Strategy: Long position triggered
• Continued bullish price action opens the door for up-trend continuation
• Confluent support at the 1.5500 zone could offer an attractive area for risk management/ stop placement.

The bullish price action in GBP/USD began on September 7th, and has since continued to put in ‘higher highs,’ and ‘higher lows.’ Ahead of FOMC, resistance had developed just under the 1.5500 handle, with 4 consecutive top-side daily wicks showing from 1.5425-1.5475. As the Fed backed off of the September rate hike, the Sterling throttled higher as this is one of the few currencies with which we can actually look for higher rates in the not-too-distant future.
After ratcheting even higher in a continuation move that topped out on Friday morning, GBP/USD ran into the underside of a projected trend-line, catching near-term resistance off of old, projected support (shown in the below chart with the purple line). This created a retracement that lasted into this morning, and support is now showing in the zone of 1.5500. This area is near the 50% Fibonacci retracement of the most recent major move (taking the May low to the June high), as well as being a ‘major psychological level,’ and a price that has offered multiple iterations of support and resistance in GBP/USD in the recent past.

Long positions can offer an attractive risk-reward ratio with the current technical setup. Stops can be placed at 1.5407 (just below the 61.8% retracement of the most recent major move – shown on the below chart in gray-dashed lines), to take on approximately 100 pips of risk. Targets can be scaled out at 1.5650 (last week’s high), 1.5730 (38.2% retracement of the most recent major move), and then 1.5800 (psychological level and the 2.5 month high).






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Talking Points:

• GBP/USD Technical Strategy: Flat
• Setups exist on both sides of Cable after the morning-star printed on Thursday and Friday of last week.
• Short-term support just north of 1.5100 could prove attractive for long plays, while resistance at 1.5250 could be used for stop placement of short-positions.

The British Pound continues to seek out a bottom against the US Dollar after putting in a bullish morning-star formation on Thursday and Friday of last week. This morning-star formation comes on the heels of a 500+ pip drop after the Federal Reserve elected not to hike rates at their September meeting. The ‘hawkish hold’ from the Fed did little to ease investors’ tensions around the global economy and the numerous factors that have been continually cropping up; namely an Asian slowdown combined with a tumultuous run in commodity prices that make the prospect of tighter monetary policy extremely daunting. But this hasn’t just impacted the US, as British rate expectations have also been priced-out as many believe that the Bank of England will not hike rates until after the FOMC.

This created a vacuum in the Cable that saw prices drop through numerous support levels as traders priced out higher rates for a UK economy that, like the US, is just starting to see the initial signs of ‘recovery’ take place within their economies. We hear from the Bank of England on Thursday, and this could provide the fuel for new trends should the bank make a concerted stance towards either rate hikes, or ‘accommodation’ due to the flurry of economic factors swirling the globe right now.

For now, the long side of GBP/USD could prove more attractive as the recently-established support just above the 1.5100 handle could provide a relatively tight stop and traders could look to lodge that stop below 1.5089, which was has been the five-month-low in the pair. This could open the door for targets at 1.5200 (previous price action resistance), 1.5250 (major psychological level), 1.5287 (76.4% Fib retracement of the most recent major move – taking the May low to the June high), 1.5308 (23.6% of the ‘big picture move,’ taking the 2007 high to the 2009 Financial Collapse low), and then 1.5345 (50% Fib retracement of the secondary move – taking the 2009 low to the 2014 high).

The short-side of the Cable could also offer opportunity: Traders could look to set stops just above the 1.5250 level, which has capped the highs from Friday and Monday; with targets set to the 1.5089 level and then 1.5000 flat, which is a major psychological level in the pair. Just below 1.5000 is the 61.8% retracement of the secondary move at 1.4909 and this could provide a third profit target for short-side plays in GBP/USD.

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We'd treat price actions from 1.4565 as developing into a consolidation/correction pattern only. Fall from 1.7190 is viewed as resuming the longer term down trend from 2.1161 and would target 1.3503 and below later.

Outlook in GBP/JPY is unchanged. Sideway consolidation from 180.36 is still in progress and further recovery might be seen. But strong resistance is expected at 188.28 to limit upside to finish the consolidation. Break of 180.36 will extend the whole fall from 195.86 and should then target a test on 174.86 key support level.

Talking Points:

• GBP/USD Technical Strategy: Flat, short setup cleared first three profit targets
• After a precipitous drop, traders should urge caution if chasing the down-trend, as a light week of upcoming data may bring congestion and retracements in especially fast-moving markets (as we’ve seen in the Cable) .
• With such an important psychological level less than 50 pips away, traders can use this to build their approach for the coming week; playing reversals should support develop above this level, or trend-continuation with breaks below.

The top-side reversal setup on GBP/USD would likely need to be accompanied by confirmation of support, as buying in this market right now would be like trying to catch a javelin (which rarely works out well). But should support develop in this 1.5000 area in the first couple of days of next week, this could provide motive for reversal strategies; and this would open the door for targets at 1.5106 (the October swing-low), 1.5184 (the 23.6% retracement of the most recent major move, taking the 2014 high to the 2015 low), and then 1.5250, which is another major psychological level as well as a projection of top-side of the downward sloping trend-channel.

On the short side, traders can utilize a two-pronged approach in looking to jump on the trend in the most efficient manner possible. Traders can look for ‘inside price action’ by waiting for prices to retrace to a potential resistance level, and this can often come in at new support or a level that had previously functioned as resistance. For this purpose, the first two levels mentioned above could prove adequate; using 1.5106 or 1.5184 to trigger additional short-side entries. Should 1.5250 come back in the market, that could prove troublesome for shorts, as the down-trend will come into question should this trend-channel give way. Traders picking up shorts with inside price action can look for targets at that 1.5000 psychological level, and then 1.4910, which is the 61.8% retracement of the ‘secondary move’ in the Cable, taking the Financial Collapse low to the 2014 high), and then the next major psychological level of 1.4750.

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GBP/CHF H4: bearish breakdow to be continuing, or bearish ranging to be started. The pair was on bearish breakdown since 15 of Dec: price broke key support levels and it was stopped by 1.4829 support level together with descending triangle pattern to be formed for the bearish trend to be continuing.

• if the price breaks 1.4926 resistance so we may see the secondary rally within the primary bearish market condition;
• if the price breaks 1.4975 resistance so the reversal of the price movement from the primary bearish to the primary bullish will be started with the secondary ranging: price will be located inside Ichimoku cloud in this case;
• if the price breaks 1.4829 support level so the primary bearish will be continuing without ranging up to the new 'bottom' to be forming;
• if not so the price will be moved within the channel.

Resistance	Support
1.4926	1.4829
1.4975	N/A

D1 price is on primary bearish market condition with the secondary ranging: price is located above Ichimoku cloud and Senkou Span line which is the virtual border between the primary bearish and the primary bullish trend on the daily chart.

• The price is ranging within 2.0947 resistance level and 2.0469 support level.
• Symmetric triangle pattern was formed by the price to be crossed for direction of the trend.
• Tenkan-sen line is above Kijun-sen line of Ichimoku indicator for the primary bullish market condition.
• Chinkou Span line is located above the price for the ranging bullish condition to be continuing.
• Nearest support levels are 2.0469 and 1.9847.
• Nearest resistance levels are 2.0861 and 2.0947.

If daily price will break 2.0469 support level on close D1 bar so the local uptrend as the secondary correction within the primary bullish condition will be started with the good possibility to the bearish reversal.
If daily price will break 2.0947 resistance level so the primary bullish trend will be continuing.
If not so the price will be ranging between the levels.

• Recommendation to go short: watch the price to break 2.0469 support level for possible sell trade
• Recommendation to go long: watch the price to break 2.0947 resistance level for possible buy trade
• Trading Summary: ranging

Trend:

D1 - ranging bullish

W1 price is on bullish market condition for the ranging between R3 Pivot at 2.1844 and R2 Pivot at 2.0574: the price is crossing second pivot resistance level at 2.0574 from above to below for the secondary correction to be started with 1.9753 first pivot resistance level as the next real target.

Instrument	S1 Pivot	Yearly PP	R1 Pivot	R2 Pivot	R3 Pivot
GBP/AUD	1.7661	1.8482	1.9753	2.0574	2.1844

If the price will break R3 Pivot at 2.1844 from below to above so the primary bullish trend will be continuing
If W1 price will break R2 Pivot at 2.0574 level from above to below so the secondary correction within the primary bullish condition will be started.
If not so the price will be ranging within the levels.

• Recommendation for long: N/A
• Recommendation to go short: watch close weekly price to break 2.0574 support level for possible sell trade
• Trading Summary: correction