RALLIES BEYOND 200-DAY SMA NOT SUSTAINABLE; SELL @1.5655
Gbp/Usd: With the daily RSI approaching the overbought 70 reading, we do not see gains extending much further and will be looking to establish a counter-trend short on any rallies back above the 200-Day SMA which currently comes in at 1.5555. The pair does have a tendency to overshoot its target and as such, selling directly at the 200-Day SMA today is not recommended. Instead, we look for any topside failure to coincide with a retest of the key trend highs in the Euro by 1.3740. We will incorporate our ATR (Average True Range) analysis to isolate our entry point today, with any moves beyond our entry seen limited. Strategy: SELL @1.5655 FOR A 1.5265 OBJECTIVE, STOP @1.5855. [I][B]Stops to be trailed to cost on a break back below 1.5605. If trade triggers and 1.5605 not broken, position to be closed out at NY close (5pm NY time) on Wednesday. Recommendation to be removed if not triggered by NY close on Wednesday.
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Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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