Interesting P.A seen on the GBP right now, traders...
Recent action shows that the GBP/USD extended Monday’s advance from the 1.32 handle, forming an additional near-full-bodied bullish daily candle. Bolstered on the back of the BoE possibly raising interest rates this week and the dollar looking somewhat fragile around the 94.54 region, will we see the British pound continue to advance against its US counterpart?
Fundamentally, we believe the BoE will have to demonstrate a hawkish tone on Thursday to keep the pair supported. Technically, however, there may be trouble ahead. On the weekly timeframe, there’s a nearby resistance plotted at 1.3301, shadowed closely by a 50.0% daily resistance value at 1.3344 taken from the high 1.3657.
Suggestions: To confirm bullish intent we would need to see a weekly close above 1.3301. Until this day, we’ll not be looking to buy this market.
In regard to potential sells, a short from the H4 Quasimodo resistance at 1.3324 could be an option. Besides being located just above the 1.33 handle (remember psychological numbers are prone to fakeouts due to the liquidity they often carry), 1.3324 is also seen lurking between both the noted weekly and daily resistances! For that reason, a short from 1.3324 with stops tightly positioned above the apex of the H4 Quasimodo formation at 1.3340 could be something to consider today. The first area of concern, should one trade 1.3324, would likely be 1.33. We would likely look at reducing risk to breakeven here and maybe taking partial profits since the position will be trading in excess of 1R. Preferably though, a H4 close beyond 1.33 would be an ideal scenario!
Data points to consider: UK manufacturing PMI at 9.30am; US ADP non-farm employment change at 12.15pm; US ISM manufacturing PMI at 2pm; US FOMC statement and Federal funds rate decision at 6pm GMT.
Fundamentally, we believe the BoE will have to demonstrate a hawkish tone on Thursday to keep the pair supported. Technically, however, there may be trouble ahead. On the weekly timeframe, there’s a nearby resistance plotted at 1.3301, shadowed closely by a 50.0% daily resistance value at 1.3344 taken from the high 1.3657.
Suggestions: To confirm bullish intent we would need to see a weekly close above 1.3301. Until this day, we’ll not be looking to buy this market.
In regard to potential sells, a short from the H4 Quasimodo resistance at 1.3324 could be an option. Besides being located just above the 1.33 handle (remember psychological numbers are prone to fakeouts due to the liquidity they often carry), 1.3324 is also seen lurking between both the noted weekly and daily resistances! For that reason, a short from 1.3324 with stops tightly positioned above the apex of the H4 Quasimodo formation at 1.3340 could be something to consider today. The first area of concern, should one trade 1.3324, would likely be 1.33. We would likely look at reducing risk to breakeven here and maybe taking partial profits since the position will be trading in excess of 1R. Preferably though, a H4 close beyond 1.33 would be an ideal scenario!
Data points to consider: UK manufacturing PMI at 9.30am; US ADP non-farm employment change at 12.15pm; US ISM manufacturing PMI at 2pm; US FOMC statement and Federal funds rate decision at 6pm GMT.
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