GBP/USD: SELL RECOMMENDATION ISSUED @1.4820 FOR THURSDAY
While we realize that our recommendation is quite a ways away from the market at present, we never like to put ourselves in a position to chase trades. Given the expected volatility in the US session due to today’s event risk, we have picked a level that if hit would be a very attractive entry point for a playable counter-trend move back into the overriding and longer-term downtrend. If the trade fails to trigger, we will happily move on and look for the next trade.
TechnoFundamentals – Gbp/Usd: Despite the recent rallies, the pair remains confined to a very prominent bear channel that has defined trade over the past several months. As such, any rallies should be used as opportunities to sell back into the overriding downtrend. However, at current levels, there is no compelling short trade available and a more significant rally would need to occur before we were to consider a position. Given today’s event risk, in the form of the G20 and the ECB rate decision, we would expect to see a volatile session of trade. The key level to watch above comes in at 1.4780 which represents the recent trend highs. We will look for this level and the 1.4800 handle to be taken out on stop hunting, before establishing a playable short trade just over the figure. Once 1.4780-1.4800 are cleared, we see little room for additional upside on Thursday, with the greater risk for a material pullback. Strategy: SELL @1.4820 FOR A 1.4110 OBJECTIVE, STOP @1.5020. Stops to be trailed to cost on a break back below 1.4770. If trade triggers and 1.4770 not broken, position to be closed out at NY close (5pm EDT) on Thursday. Recommendation to be removed if not triggered by NY close on Thursday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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