GBP/USD technical analysis – moving average support holds
The British Pound remains a strong currency but has had to cede ground to a robust US dollar of late.
GBP/USD technical outlook
- Sterling rallying back against the US dollar
- Retail traders are long GBP/USD and the outlook is mixed
GBP/USD is pushing higher in early trade with the pair approaching $1.39 and Friday’s high of $1.3907. The move has been helped by a slightly weaker US dollar - although the greenback trades near its three-month high – while Sterling remains a strong currency in its own right, as evidenced against the euro, Japanese yen and the New Zealand dollar.
The daily chart shows that the 50-day simple moving average (SMA) - green line - has provided solid support for GBP/USD over the last five months and this seems to be the case again after the pair tried and failed lower over the last couple of sessions. GBP/USD now approaches the 20-day SMA (red line), a short-term indicator that had provided support of late but has now turned into short-term resistance after last week’s break lower. This resistance currently sits at $1.395.
MAs explained for trader
Retail trader data shows 52.82% of traders are net-long with the ratio of traders long to short at 1.12 to 1. The number of traders net-long is 3.60% higher than yesterday and 7.18% higher from last week, while the number of traders net-short is 7.48% higher than yesterday and 10.12% 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.
Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.
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