GBP/USD Technical Outlook - Support Under Pressure As US Dollar Firms

GBP/USD remains under pressure and is currently eyeing a further re-test of the 1.3668 multi-week low made in late March. The pair have rejected this level once today but this support does now weak and a further sell-off may see the pair break through the recent supportive uptrend and look at 1.3600 ahead of an older swing-low at 1.3560, made in early February.

10 and one 10 us dollar bill

Image Source: Unsplash

Ominously for GBP/USD bulls, the short-term series of lower highs and lower lows remains intact, keeping pressure on the pair. The moving averages are mixed, with the 20-day sma below the 50-day sma and above the 200-day sma, while CCI is just moving into oversold territory.

GBP/USD Daily Price Chart (July 2020 - April 9, 2021)

(Click on image to enlarge)

IG client sentiment – see below – has thrown up an important positioning swing with traders increasing their longs substantially over the last week, while also cutting their short positions over the same timeframe.

Retail trader data show 61.59% of traders are net-long with the ratio of traders long to short at 1.60 to 1.The number of traders net-long is 2.64% higher than yesterday and 44.21% higher from last week, while the number of traders net-short is 0.80% higher than yesterday and 15.73% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall.Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias.

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