Talking Points
- GBPUSD completes outside day reversal off key support
- July opening range high remains intact
- Event Risk on tap from UK & US this week
GBPUSD Daily Chart
![GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065](https://media.dailyfx.com/illustrations/2014/07/15/Forex-GBPUSD-Posts-Outside-Reversal-Off-Key-Support--Bullish-Above-1.7065_body_Picture_2.png)
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- GBPUSD defends key support structure- outside reversal day – bullish
- Sterling remains constructive above key support 1.7045/65- bullish invalidation
- Break eyes support objectives at 1.6972/85, 1.6890
- Key resistance at July ORH at 1.7176- bearish invalidation
- Breach targets objectives at 1.7245 & 1.7300/30
- Daily momentum reversal at 60- constructive
- RSI resistance trigger pending
- Event Risk Ahead: UK Employment & US Industrial production data tomorrow and University of Michigan Confidence survey on Friday.
GBPUSD 30min Chart
![GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065](https://media.dailyfx.com/illustrations/2014/07/15/Forex-GBPUSD-Posts-Outside-Reversal-Off-Key-Support--Bullish-Above-1.7065_body_Picture_1.png)
Notes: Today’s better-than-expected CPI print offered a catalyst for the pound which was trading just above critical support at 1.7045/65. The subsequent rally has now completed and outside reversal day for the pair and keeps our focus weighted to the topside while above today’s low.
That said, the pair failed to push through the initial July opening range high and while our broader bias remains constructive, we will respect this range until a close above is achieved. Bottom line: looking to buy pullbacks while above 1.7045/65 with a breach of the monthly high at 1.7176 targeting topside objectives at 1.7245 and 1.7300/30. A break/close below 1.7045 invalidates this particular setup with such a scenario risking a pullback into support targets sub-1.7000.
Caution is warranted as we head into event risk later this week with the UK employment report and US industrial production on tap tomorrow. The headline UK ILO unemployment rate is expected to fall from 6.6% to 6.5% and the release may offer a catalyst for sterling’s next move. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets | Timeframe | Level | Technical Relevance |
Bearish Invalidation | Daily / 30min | 1.7178 | July ORH |
Break Target 1 | Daily / 30min | 1.7245 | R1 Monthly Pivot |
Break Target 2 | 30min | 1.7285 | 100% Extension |
Break Target 3 | Daily | 17300 | 100% Extension |
Break Target 4 | Daily | 1.7330 | 50% Retracement |
Break Target 5 | Daily | 1.7397 | 1.618% Extension |
Support Target 1 | 30min | 1.7140 | 38.2% Retrace / Weekly ORH |
Support Target 2 | 30min | 1.7108 | 61.8% Retracement |
Support Target 3 | 30min | 1.7086 | 78.6% Retracement |
Bullish Invalidation | Daily / 30min | 1.7045/63 | 100% Ext(s) / 09 High / June Swing / 23.6% Retrace / Channel Sup |
Break Target 1 | Daily / 30min | 1.6993 – 1.7004 | Soft Pivot / 38.2% Retracement / May High |
Break Target 2 | Daily / 30min | 1.6972/84 | Monthly Pivot / 2009 Close High / May Close High |
Break Target 3 | 30min | 1.6930/35 | 50 DMA / 50% Retracement |
Break Target 4 | Daily / 30min | 1.6879/90 | 78.6% Ext / 61.8% Retracement |
Average True Range | Daily (20) | 68 | Profit Targets 17-19pips |
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
- NZDUSD Opening Range Setup- Rally Vulnerable Sub 8850
- GBPJPY Targets Channel Support- Longs Favored Above 173.75
- AUDUSD July Range Targets Key Support- Shorts Favored Sub 9440
- EURUSD July Opening Range Play- Shorts Favored Sub 1.37
- AUDCHF Rebounds Off Key Support- Longs Favored Above 8360
- GBPJPY Testing Key Inflection Zone- Shorts at Risk Above 172.70
- GBPCAD Scalps Target Weekly Range- Bullish Bias at Risk Sub 1.8480
- GBPAUD Scalps Favor Buying Dips Post June Range Break
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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