LOOKING TO SELL BY 50% FIB RETRACEMENT
Gbp/Usd: The doji close and outside day on Wednesday have signaled some form of an end to the latest sharp setbacks with the market rebounding into Thursday to trade just over 1.6600 thus far. At this point it now becomes more difficult to assess whether the latest pullback off the 1.7045 yearly highs from the previous week was merely a minor correction, or whether we have put in a more meaningful top by 1.7045 and are looking to head lower over the coming days and weeks. We will adopt the latter theory today and assume a USD bullish outlook, with the hope that any additional rallies intraday will once again be met with good selling pressure. However, without any strong conviction, we also recommend playing this on the conservative side and only looking to sell on an extreme intraday rally back above 1.6700 to the 50% retracement off of the latest moves. At that point, even if the market does decide that it wants to continue higher, any additional gains on Thursday should be limited from there which should give us an opportunity to exit the trade if no follow through is seen. STRATEGY: SELL @1.6715 FOR AN OPEN OBJECTIVE, STOP @1.6915. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5PM ET) ON THURSDAY.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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