Daily Set Up: GBPUSD Symmetry Swing Set Up
Daily Set Up: GBP The Purchasing Managers’ Index came in at 54.8 in June, down from 56 in May and lower than the 55 City of London analysts had estimated. Last week GBP was boosted by hawkish comments from BOE Governor Mark Carney. He said that the BOE would have to consider removing monetary stimulus and the markets jumped on his comments as a possible sign that he was not adamantly opposed to rate hikes. Although there are renewed fears that Brexit will take a toll on the British economy, inflation is running close to 3%, well above the BoE’s target of 2% target. A rate increase would help lower inflation, but Carney, who has voiced concerns about Brexit’s negative ramifications since the vote last June, had been solidly against a rate increase.
USD The Fed minutes for the June meeting showed almost all policymakers supporting a rate hike at that meeting. Several policymakers wanted to announce start of balance-sheet trimming within a ‘couple of months’ while others wanted to wait until later in 2017. Several policymakers felt the reduction in the balance sheet and associated policy tightening “was one basis for believing that…the target range for the federal funds rate would follow a less steep path than it otherwise would.” Some others, however, said the shedding of bonds should not figure heavily in deciding monetary policy. Most policymakers viewed recent softness in inflation data has having little bearing on inflation trend. Several policymakers were concerned recent softness in inflation might persist due to limited pass-through from resource utilisation
Technical: 1-3 Day View – As 1.2940/20 supports on an intraday basis 1.3048 is the next upside objective, ahead of the pivotal 1.3238 Only a closing breach of 1.2810 concerns the near term bullish bias.
1-3 Week View – The weekly failure to close above 1.3045 ahead of the broader symmetry swing objective sited at 1.3238 suggest underlying weakness persists 1.2450 becomes pivotal for the medium term perspective
Trade Idea: I am monitoring price action in GBPUSD price looks poised to make a pivotal test of symmetry swing and structural support sited at 1.28 I will be watching for intraday and daily reversal patterns at this level to set long positions targeting a retest of current cycle highs with the potential for upside extension to test the weekly symmetry swing objective sited above 1.32. The move back to retest current cycle highs will be critical as this move has the potential to develop some significant momentum divergence and a daily double top pattern that may offer a reversal trading opportunity