GBP/USD is up against the 200day sma/ema on the DTF (Daily Time Frame).
This is a formidable barrier and the GBP BULLS will have to work hard here to break down this resistance.
With the weight of UK General Election out of the way and the threat of a hung parliament and uncertainty no longer crushing the GBP, I expect the GBP to strengthen from these levels.
Today we have the Official Bank Rate and a possible MPC Statement but as the Bank Rate isn’t going to change its unlikely we’ll get any statement so we need to wait until Wednesday and the BOE Inflation Report and Gov. Carney’s comments.
This could well set the direction of G/U for the foreseeable future.
I’m already LONG in this market from 1.5451 so this trade is -40 at the moment but I expect it to advance over the next few sessions.
Also on the DTF the 200 day ema is close to crossing over the 200 day sma. This would be a very BULLISH signal. The last time the 200 day ema was above the 200 day sma was over 12 months ago.
I closed my LONG from 1.5451 at WR1 (1.5609) for 150+ pips and was waiting for a pullback to enter LONG again that didn’t come.
The Manufacturing Production numbers at 09:30 would have been a good entry in hindsight but I’m always reluctant to enter a trade LONG when we’re at pivot resistance.
The US Dollar Index is now approaching critical support at 11733. A break here an we could see a deep USD pullback and this will help all SHORT USD positions.
I’m looking to get LONG on this market at the first opportunity.
There are clear signs that the BULL run of GBP is losing steam. Today we had significantly improved Average Earnings numbers out of the UK and dismal Retail Sales numbers out of the US.
We should have seen GBP race northward as a consequence but we haven’t.
The long term trend is still up but entering at these levels with the H4 RSI at +70 and tipping down would be risky.
I’m still looking to get LONG on a pullback but I’m not entering SHORT on this market though I am SHORT GBP/JPY from 187.71.
A pullback to 1.5450-1.5500 area would be a good place to look for a LONG position.
GBP/USD continues to work its way lower and a likely target is the 200 sma on the H1 chart and below that Ws1 Pivot which comes in at 1.5483.
I remain SHORT from 1.5734.
GBP’s BULL run since the 12th April is clearly running out of steam but it remains unclear if this retrace is a resumption of the downtrend from July 2014 or a pullback to alleviate over bought conditions and the up trend will resume once support has been found.
I favour the second scenario and expect to see GBP/USD at 1.60 at some time in the future but that may well cap any advance before we start heading down again.
Quite a hectic week for news and statements kicking off tomorrow with UK CPI. A print above expectation could move the GBP swiftly forward.
I remain SHORT from 1.5734 as advised on my website and the first area of potential support at 1.5600 area has broken and the price is headed for the next significant support area at 1.5483 - the WS1 Pivot.
Todays CPI miss has accelerated GBP’s decline.
Its not going to take much for this retracement to become a rout and a resumption of the long term down trend but this doesn’t look like it even though the US Dollar Index is strengthening.
Having said that a rising trendline comes in at 1.5410. A break of this support could indicate a larger reversal and maybe a shift in sentiment.
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The 1.5483 support I mentioned earlier in the week was enough to hold up GBP BEARS and we never made it down to the trendline support at 1.5446.
Todays exceptional Retail Sales numbers have put the BULLS firmly in control and its possible we could be headed back to previous highs and an attempt to head towards 1.60 as I suggested on Monday.
The US Dollar Index is headed south today which will also help GBP BULLS.
13:30 we have Unemployment Claims and 15:00 Existing Home Sales and Philly Fed so the GBP BULLS could be weakened if these numbers exceed expectation.
After surging to just shy of 1.5700 following the stellar Retail Sales numbers GBP was clearly coming under pressure so I entered SHORT at 1.5654.
Following strong US CPI Numbers GBP rapidly declined to trendline support at 1.5547 and with oversold conditions coming into play I exited this SHORT and I remain on the sidelines.
With a weekend and a Bank Holiday approaching I shall remain out of this market until Tuesday unless Chair Yellen announces anything particularly significant at 18:00.
Yesterdays LONG on GBP meandered north a little and overnight my b/e STOP was hit for no damage. GBP sold off quite aggressively from 06:00 and is now headed for support at WS1 Pivot.
This area will act as a magnet as the BEARS will attempt to drive the price lower.
If/when we get to 1.5366 (WS1) I shall look for a LONG trade but this will only be a rebound trade as the medium/long term direction for this pair is down.
The USD has strengthened strongly over the last few sessions and the long range charts suggest GBP/USD is headed for 1.5300 area.
Yesterday I expected GBP to head for WS1 pivot support and I entered LONG on the bounce with a STOP 20 pips under the pivot.
The subsequent price action has been unconvincing.
The signs are we may be headed back to retest WS1 to see if the BULLS can gain control of the position.
We would need to see a break above 1.5436 to have any confidence that GBP/USD is moving higher and with US Dollar Index turning green this doesn’t look likely.
Weak Manufacturing PMI numbers has pushed GBP down and we seem to be headed for Ws1 support at 1.5180.
This area coincides with the 23.6 Fibonacci extension from the Daily time frame and the Daily 100 day sma also comes in here so we have very strong triple support.
We will almost certainly head north from here but how far is unclear. If however 1.5180 should fail then GBP/USd will be in serious trouble and its likely we could be headed for new lows under 1.4566.
This is a news heavy week though and anything could happen to alter this analysis.
US ISM Manufacturing at 15:00 could see GBP’s fortunes decline further or possibly recover if the numbers miss.
Yesterday I targeted 1.5180 area as a potential LONG trade as there was a confluence of support in an around this area.
I recommended going LONG at 1.5185 to my subscribers with a 25 pip STOP and with UK Construction PMI exceeding target this trade has taken off nicely.
In the absence of further major releases due today this trade has a chance to advance higher although FOMC Member Brainard speaks at 15:00 and with the markets hyper sensitive currently a single word can send prices higher or lower but Brainard aside the recently beleaguered GBP may take this opportunity to regain some of its recent losses.
I exited my LONG from 1.5180 at 1.5366 when the 200 day moving average on the H1 chart turned the BULLS back.
With such a determined move by the BULLS and no sign of a positive move south I refrained from SHORTING the pair though it looked like it had chances and I decided to wait until we saw what the Services PMI would give us in the morning and GBP quickly sold off on the missed target.
Currently we’re somewhat stuck in no mans land with the price recovering somewhat but the BULLS look weak.
From (1.5303) the price could go anywhere.
Today has seen a lot of whipsaw action that has made trading testing. Positive Trade Balance and ADP numbers out of the US should have seen Dollar BULLS in the ascendancy but we’ve seen the USD weaken considerably over the last hour or so and these declines have accelerated with the ISM miss.
I suspect GBP/USD may drift lower from here but the markets are too erratic to place a trade.
I shall stay out for now until the position is more clearly defined.
A weak dollar this morning has been the catalyst for some sustained GBP/USD buying.
This was a surprisingly strong move and coincides with the US Dollar Index falling sharply.
Currently the first target for is WR1 at 1.5450. Overbought conditions mean its almost inevitable the price will reverse here but with a MPC Rate Statement due around 12:00 and US Unemployment Claims at 13:30 the medium term direction for GBP is unclear.
If we get to 1.5450 before 12:00 I shall look to SHORT GBP if we get a pullback and then get the trade to b/e and wait to see what happens at 13:30.
My SELL LIMIT order placed at WR1 at 1.5450 failed to trigger as GBP made it to 1.5441 and then turned south.
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It would have been a nice trade had it made the extra 9 pips but that’s trading.
Today is of course the big one and although every NFP Friday is important, this one has the potential to be game changer.
226k are the expected numbers and a print 10% either side of this number or greater will most likely send a clear message to the markets about the likelihood of a September rate rise.
Its pure speculation what the number is going to be but based on other recent economic releases my guess is for a print that no-one wants - 226k or just a bit less
If we meet target or miss by 10k or exceed by 10k we’ll be as we were, in a state of uncertainty.
Trading GBP/USD currently is a guess. GBP is across the board BEARISH but its not convincing and 1.5303 will most likely hold up the BEARS from here (1.5315).
Staying on the sidelines is the easy choice and waiting for the potential fireworks at 13:30.
I slightly favour a GBP boosting print when the dust has settled so if there is a chance of getting a LONG trade to break even about an hour before this could pay dividends but the inevitable whipsaw trading will most likely take all but the widest STOPS out.
Best wait for the numbers and if we get a miss then look to get LONG GBP/USD.
…not a bad thing
