Talking Points
- GBPUSD August opening range takes shape above technical support
- Possible inflection range 1.6809/25
- Event risk on tap heading into next week
GBPUSD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- GBPUSD holding key support / August ORL 1.6808/26- bullish invalidation
- Key resistance / August ORH 1.6890-1.6900- bearish invalidation
- Resistance breach targets objectives at 1.6984-1.7000, 1.7045/65
- Support-break targets 1.6738/54, 1.6692
- Daily RSI resistance-trigger pending
- Event Risk Ahead: BoE Rate Decision tomorrow, Trade Balance on Friday
GBPUSD 30min Chart
Notes: The break below 1.7065 last month shifted our bias to the short side of the pound with the subsequent sell-off now bringing the pair into key support at 1.6809/25. The August opening range is taking shape just above and with momentum in the greenback starting to wane the sterling is at risk for a near-term recovery higher.
The pair has been carving out a well-defined weekly/monthly opening range between 1.6809 and the 1.69-handle and we’ll look for a breach of this zone to validate near-term directional bias while noting a preference to buy dips while above 1.6809. A break below this threshold shifts the focus back on the downside with such a scenario eyeing subsequent support objectives lower down at 1.6738/54 and the May low.
The average true range has remained rather tight here so we’ll up the profit targets to 38.2% of the daily ATR- this puts us at about 24pips per scalp. Note that caution is warranted heading into tomorrow’s rate decision with the event likely to fuel added volatility on sterling crosses. More significant data for the pound comes into focus next week with the Bank of England Quarterly Inflation Report on tap for Wednesday. 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 | 1.6890–1.6900 | Monthly & Weekly ORH / 23.6% Retrace |
Break Target 1 | 30min | 1.6930 | Soft Resistance / Pivot |
Break Target 2 | 30min | 1.6955 | 38.2% Retracement |
Break Target 3 | Daily / 30min | 1.6984-1.7000 | 2009 Close High / 50% Retrace / May High |
Break Target 4 | Daily / 30min | 1.7045/65 | 61.8% Retrace / 100% Ext(s) / 09’ High |
Break Target 5 | 30min | 1.7094 | 7/23 Swing High / Soft Resistance |
Bullish Invalidation | Daily / 30min | 1.6809/24 | Weekly & Monthly ORL / 50% & 76.4% Retrace(s) |
Break Target 1 | Daily / 30min | 1.6738/55 | 61.8% Retrace / 61.8% Ext(s) / 2011 High |
Break Target 2 | Daily / 30min | 1.6692 | May Low |
Break Target 3 | 30min | 1.6660 | Soft Support / Pivot |
Break Target 4 | Daily | 1.6634 | 200DMA |
Average True Range | Daily (20) | 63 | Profit Targets 22-24pips |
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
- NZDUSD at Key Support and August Range Low- Exhaustion or Break?
- EURUSD Risks Correction Into August Open- 1.3372 Key Ahead of ECB
- USDOLLAR Vulnerable Heading Into NFPs- August Setups in Focus
- EURAUD Risks Near-Term Reversal Heading Into H&S Target, Key Support
- AUDNZD Rally At Risk Ahead of RBNZ- 1.0880 Key Resistance
- NZDCAD Testing Range Support Ahead of RBNZ- 9295 Key
- GBPJPY Eyes Major Inflection Zone- Weekly Opening Range in Focus
- NZDJPY Reversal Underway- Scalps Target Key Support at 88.20
---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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