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
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
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
To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list
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Source: Daily fx
