Weekly Trend direction: Bullish
Weekly trend reversal level: 2.0040
Strategy: Whilst above the weekly trend reversal level, buy dips to support levels after an entry signal.
Medium term: The trend remains bullish whilst above roughly 1.9200, but it is becoming mature and our medium term target is possibly 2.100. As we approach the BIG figure at 2.0000 and indicators become extremely overbought, great caution is required, as swings both ways may be huge, random and very fast. Big overhead resistance from very long term highs lies above between 1.9800 and 2.100, and general dollar weakness supports from underneath. This means we shall have to allow for more of the same for several more weeks or months, and trading will continue to be tricky.
Today's trade suggestion: A bit chaotic last night as we rushed up to 2.0350 and then collapsed during Asia to 2.0150, but in essence there is no change to the overall scenario. While the euro tests the all time highs, Sterling is languishing in the doldrums between the 2 Fibonacci retracement levels. We feel that Sterling will continue to rise to the 78.6% Fibonacci at 2.0440 before a round of correction. Look to remain bullish and hold longs/buy dips until we get there, and then sell on clear signs of topping for a counter-trend drop back to support areas. Whether we are able to re-visit the recent multi-year high at 2.0650 or not depends a lot on general dollar sentiment in the balance of this month, but please heed the medium term warnings above. 2.0160 might be a good opportunity to buy today, stops below 2.0140.
Key G7 Support levels: 2.0040
Counter-trend opportunities: Sell 2.0440
GBP/USD Hourly chart:
GBP/USD Weekly chart: