GBP/USD: Levels, Ranges, Targets

GBP/USD’s 3105 pip June 2016 Brexit fall from 1.5012 to 1.1950’s in Oct 2016 sent GBP/USD into not only massively oversold but an impossibility to hold at drastically lower levels. In the larger price scenario, Brexit was a minor event as GBP/USD was inside a larger correction from November 2007 highs at 2.1100’s. Brexit was the assist to allow GBP to embark on its continued downtrend and to achieve a 9 year bottom at 1.1950.

EUR/USD was in a similar situation June 2008 at 1.6000 peaks. The 2008 crash was the impetus to send EUR/USD on a 9 year downtrend to 1.0300 lows in January 2017. EUR/USD and GBP/USD peak prices were the telling story and events sent both on its corrective course lower. Both GBP/USD and EUR/USD completed its 9 year mission and now trade in a giant correction mode.

The moment of truth and big decisions are here for GBP prices as GBP now finds itself in a trading range against vital break points to decide if correction mode is complete and GBP heads lower or will GBP continue its larger correction higher.
Vital break points inside the larger price scenario are located at 1.5229 and 1.5287. A break above informs GBP heads far higher but along the way is stiff resistance at the 5 and 10 year averages at 1.4690 and 1.5406.

The price at 1.4196 becomes most important as a break above signifies GBP enters a trading range from 1.4196 to 1.6262. At 1.4196 is actually a short term target price and the inflection point to align the larger distribution in overall prices. This means above 1.4196, GBP/USD embarks on overbought status as it travels higher and short targets become 1.4196.

Current GBP/USD prices however are far to high in terms of neutrality positions long and short term but at 1.4196 is not only important as a range point but high volatility will be seen. Further volatility inflection points are located at severely low 1.4044 to 1.4015, 1.3997 to 1.3962 to represent 1.3962 as high and 1.3997 low. Then 1.3826 to 1.3892 as both skyrocket high.

GBP/USD achieves full neutrality at 1.3588 and becomes low and flat on the floor at 1.3498. Overall, above 1.4196 to 1.5229, GBP/USD travels to a trading range and normalizes at neutrality and this includes the 5 year average at 1.4690. Neutrality concepts entail long lows, short tops over sustained periods.

Above 1.4196, next break points are located at 1.4249, 1.4398, 1.4431, 1.4548 and the 5 year average at 1.4690. Most vital over next weeks are 1.4431 and 1.4548.

GBP/USD to travel lower must break rising lines at 1.3826 and 1.3781. The main point break to travel lower and challenge 1.3826 is located at 1.3950 then comes 1.3883. Why 1.3826 and 1.3781 represent extremely rough break points is because 1.3826 is protected by 1.3803 and 1.3781 is defended by 1.3748. The area from 1.3748 to 1.3826 is forming a massive cluster of supports. The explanation to the cluster is below 1.3748 then GBP/USD falls off a cliff as the next most vital break point is located at 1.3350. At 1.3350 explains why 1.3500’s are extremely vital as a break and range point.

Below 1.3748 and not expected anytime soon unless implosion strikes, next comes 1.3727, 1.3673 and 1.3565.

Current GBP/USD trades between its wide, wide ranges from 1.4055 and 1.4052 to 1.3597 and 1.3510. Current GBP/USD from 1.4100’s trades outside its ranges and must travel lower to 1.4055 and 1.4052. Lower and outside ranges informs GBP/USD range point at 1.4196 represents a huge challenge short term.

Despite Brexit as described by a minor event in the life of GBP overall prices, the damage created by Brexit is clearly seen in deep contexts particularly when GBP/USD traveled to 1.1950. At 1.1950 added far more injury to overall prices than Brexit alone.

At 1.1950 created extraordinarily wide ranges both short and long term inside a long long climb to a normalized price. To describe current 1.4100’s, the top channel is located at the 14 year average at 1.6380 and the top price overall is located at 1.6418. GBP/USD overall retains a huge potential to trade considerably higher over time as the break points at 1.3800, 1.3700 and 1.3300 represents the bottom floor in the larger view of prices.

 

Brian Twomey