My starting point for chart analysis is the Daily time frame. On the DTF my first action is to place Fibonacci points across the highs and lows.
Earlier this week when GBP/USD was at 1.6453 area I posted this:-
GBP/USD is now at the last chartable support point before the 61.8 fib at 1.6282
As can be seen the move down by GBP/USD has hit the 61.8 exactly and as I type this has moved away.
This presents a number of trading possibilities and options however the waters are muddied because at 13:30 we have the most significant news release of the month - Non-Farm Employment Change and Unemployment Rate out of the USA.
Had this been a non news day reaching such a significant point on the chart (61.8 fib or 38.2 fib depending on how you set the Fib) then you would have been advised to exit SHORTS here.
The area would also present an ideal opportunity to go LONG with a stop just below the Fib area.
It also presents an opportunity to SHORT the GBP/USD if the 1.6280 line is broken.
With such significant news however coming up, spreads will widen and STOPS could be whipsawed out.
The expectation is for a surprise to the good for these numbers and its likely that recent USD strength has factored this in.
What this means is if the numbers are only marginally better than expected or actually miss target there’s likely to be some sustained USD selling which will benefit GBP LONGS.
If you’re not in this market I’d wait until the news comes out and evaluate accordingly.