GBP/USD Technical Analysis Update WC 10th December
(Forex-FX-4X.com, Pound/Dollar Forecast, Week Of 10th December)
- GBP/USD, Market Sentiment Overview
- The latest CFTC Commitments of Traders (COT ) report, shows a GBP net long position of 27K versus the 10K prior reading. This report also revealed a net USD short position was in place as of Tuesday last week, to the tune of over $800 million.
- The Bank of England held the key rate at 0.5% with the asset purchase target likewise held at £375bn.
- Under par UK industrial production data reported for the start of Q4.
- Sterling rallied to a two-week high versus the euro on Friday as elevated speculation around a potential ECB (European Central Bank) rate cut increased.
- The following price action has unfolded for the pound/dollar pair this week:
- Cable found resistance at the 61.8% Fibonacci retrace level around 1.6130, as can be seen on the daily timeframe pound/dollar chart below.
- Thursday gave a bearish engulfing candle, a constructive technical development in the near term, and the confirmation break under the candle low has likewise seen a break under ascending trend-line support.
- There has been an initial push lower after the aforementioned bearish setup, which found support at 1.6001. A break under the 1.6000 handle was a step too far on Friday.
Heading into next week (WC 10th December) the key near term levels with associated price action we will be monitoring follows:
- 1.6000 has held on the first push lower but any sustained break under this level adds bearish weight following the engulfing candle and trend line break setup.
- To the upside, the ascending trend line could see a retest around 1.6070 if hit on Monday, further to this is the 1.6130 area range resistance aligned with the 61.8% Fib ret.
- In related markets we also note the EUR/USD pair has seen a strong rejection from the recent range highs around 1.3100, any sustained downside could also potentially drag cable lower on a broad based dollar strength play. We also note the UK FTSE 100 closed Friday up +0.2% and printed the third consecutive weekly gain.
GBP/USD Daily Chart 8/12/12