GBP/USD moved above 1.32 on Thursday and extended to 1.3256 today; its highest level since Nov. 2. The treasury yield curve flattening and a better-than-expected UK retail sales data released yesterday seems to be pushing the pair higher.
As of writing, the spot is trading at 1.3240. The technical studies show the pair could rally by at least another 100 pips to 1.3330 levels.
Daily chart
The above chart shows-
- Sideways channel with resistance around 1.3308 and support at 1.3038.
- The ascending trendline (sloping upwards from the Mar. 14 low and Jun. 21 low) is seen offering resistance at 1.3315.
The 5-day MA and the 10-day MA are curled up in favor of the bulls. Also, the 50-day MA, the 100-day MA, and the 200-day MA carry a bullish bias. The RSI is gaining altitude as well.
Weekly chart
- The above chart shows the spot has formed a nice bottom in the 1.30 neighborhood. That has allowed the weekly 100-MA to shed its bearish bias
Clearly, the charts indicate the spot is likely to rise at least by another 100 pips. Looking at the weekly chart, the spot looks set to test 1.35 levels, especially if today's close is above the weekly 100-MA level of 1.3219.
Put unwinding gathers pace
GBP/USD GBUZ7 Open Interest Change: Current (Nov 16 - Prelim) vs Nov 15
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 35,206 | -2,178 | 7,121 | 52 | 28,085 | -2,230 |
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 39,325 | 260 | 8,768 | -17 | 30,557 | 277 |
- The numbers published by the CME show a sharp decline in the open interest (OI)/open positions in the GBP/USD Dec. expiry put options.
- The open interest in the put options fell by 2230 contracts yesterday. Meanwhile, the open positions in the calls improved by 260 contracts.
OI chart
- Put unwinding was seen at 1.30 strike (971 contracts) and 1.28 strike (1069 contracts). Meanwhile, 1.3250 call added 178 contracts.
GBP/USD GBUZ7 Open Interest Change: Current (Nov 16 - Prelim) vs Nov 9
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 35,206 | -1,241 | 7,121 | 104 | 28,085 | -1,345 |
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 39,325 | 428 | 8,768 | 66 | 30,557 | 362 |
The story is similar if we take into consideration the changes in open interest in the last one week.
- The open interest in Puts dropped by 1241 contracts, while the open interest in calls has gone up by 428 contracts.
View
The bullish technicals, coupled with the unwinding in the put options indicates the spot is likely to take out immediate resistance at 1.3330 and extend the rally to 1.35 levels over the next couple of weeks. Only an end of the day close below the 10-day MA level of 1.3167 would abort the bullish view.
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