In absence of Brexit-related headlines, sterling’s strength Monday was funded by prevailing USD weakness. GBP/USD gained traction amid the early part of Monday’s hours, welcoming a to-the-point rejection off 1.32 which was likely supported by additional technical presence off February’s opening level at 1.3176, based on the H4. With the relative strength index (RSI) fading 85.00, the candles settled around 1.31. A breakdown south today could lead to a test at 1.3070ish (three-week tops), closely followed by the 38.2% Fibonacci retracement ratio at 1.3020 and the widely watched key figure 1.30.
Interestingly, weekly price nudged above long-standing trend line resistance, pencilled in from the high 1.5930. The breach may ignite buy-stop liquidity, pushing for moves towards the 2018 yearly opening level at 1.3503.
Activity on the daily timeframe penetrated trend line resistance, extended from the high 1.3514, on Friday, closing a touch off its highs. Follow-through buying Monday saw Quasimodo resistance enter the fold at 1.3173, a level that’s holding ground.
The break of the current weekly trend line resistance is significant, yet it is not the first time we’ve been in these waters and retreated to bearish ground. Therefore, traders may be taking this with a pinch of salt.
With daily price fading Quasimodo resistance at 1.3173, a move through 1.31 may be seen today, triggering sell-stop liquidity and arousing sellers. As stated above, downside targets south of 1.31 are seen at 1.3070, 1.3020 and 1.30.
Disclaimer: The information contained in this material is intended for general advice only.