Trade of the Day: GBPUSD To Test And Fail 1.53
Fundamental: GBPUSD to test and fail 1.53, looks like the likely progression from here. GBP opened at around 1.5160 levels yesterday against the USD and traded weaker across the board before finding its feet in late New York trading, . Support for GBPUSD was again weakened ahead of today’s CPI data and Thursday’s US Fed rate decision meeting, which are starting to weigh on GBP. Against a strong euro, the sterling fell to a seven-week low following BoE Deputy Governor Minouche Shafik’s speech, in which she stated there was no great hurry to raise interest rates.
Technical: While 1.5150 supports intraday downside corrections expect a move to test symmetry resistance at 1.5297. A failure at 1.51 opens a retest of pivotal 1.5050.
- I am looking for the Cable to replicate price action seen in October as we advance in a three legged correction to test at or near 1.53, where I anticipate offers to overwhelm and for the next leg of downside to develop as we test and break December lows en-route to retest 2015 lows. I will be monitoring intraday price action for reversal patterns at or just below 1.53 to venture short leaning against 1.5380 looking for a downside ratchet.
- This morning we have a raft of UK data and I will not position for this trade in advance of the data release, I prefer to use a post spike to enter these Trade Of the Day set ups.
- It is also note worthy that tomorrow we have the FOMC rate decision followed by a press conference by FED Chair Yellen. This meeting has the potential to cause some market dislocation should the FED disappoint the markets so size your trades accordingly around this market event.
For updates on trade of the day set ups and the other trades I am currently monitoring be sure to follow me on Twitter @LFXPatrick