GBP : Rebound Falters

(Tue, 15 Dec 2020). Sterling is down more than 0.7% against the US Dollar early in the week after gapping higher into the Sunday open with GBP/USD reversing off technical resistance on Monday. The broader correction off the yearly highs is now in question and we’re looking for a break of the weekly opening-range for guidance in the days ahead. These are the updated targets and invalidation levels that matter on the GBP/USD price charts.

STERLING PRICE CHART – GBP/USD DAILY

Technical Outlook: The British Pound reversed off a key resistance pivot early in the month at 1.3495-1.3504 - a region defined by the 2017 high-day close and the 2018 yearly open. A pullback off this threshold marked two equal legs off the highs before exhausting on Friday with a gap into the weekly open failing today a the 2020 high-day close at 1.3437. Is the recovery over?

Critical resistance remains at the upper parallel of the ascending pitchfork formation we’ve been tracking off the September lows around the 1.35-handle – a breach / close above is needed to mark resumption of the broader uptrend with such a scenario exposing the Brexit gap at 1.3670. Daily support steady at the 61.8% Fibonacci retracement of the 2018 decline, the objective 2020 yearly open 1.3245/50 with a break / close below 1.3108 suggest a more significant high was registered last week.

STERLING PRICE CHART – GBP/USD 120MIN

Sterling Price Chart - GBP/USD 120min - British Pound vs Dollar Trade Outlook - Cable Technical Forecast
Notes: A closer look at Sterling price action shows GBP/USD trading within an embedded descending pitchfork extending off the yearly highs with the weekly open advance failing at the upper parallel / high-day close earlier today. Initial support rests with the median-line backed by 1.3250 with 1.3162 and 1.3108 still zones of interest for possible downside exhaustion IF reached. Ultimately a topside breach above uptrend resistance is needed to mark resumption towards the 2017 high close at 1.3589 and 1.3658/75.

Bottom line: Sterling is carving the weekly opening-range just below the high-day close and we’re looking to the break for guidance. From a trading standpoint, the threat remains for deeper correction in British Pound while below 1.35 – ultimately a larger setback may offer more favorable entries closer to uptrend support with a breach above likely to fuel accelerated gains in Cable.

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