DecaPip Daily 19/08/2015

Introduction to DecaPip
Welcome to our newest feature; DecaPip. The concept is simple: our professional market technician, with an exceptional system, showcases his own daily Support and Resistance levels across a broad spectrum of FX currency pairs. The most effective way to use the levels are:
  • If indicated levels hold, look for the price to reverse.
  • If levels are broken, look for the price to continue past to new highs or lows.

For Wednesday’s DecaPip Daily feature I would like to look at the recent trading activity in GBPUSD and how we can potentially trade this pair going forward in the near term.

Yesterday we saw a heavy move to the upside on better than expected UK CPI figures which saw the pair reach 1.5718 before a lackluster retrace down to the 1.5650 level.This has left the pair still without a meaningful close above the 1.5700 on a daily basis and we therefore find ourselves still with the 1.5500-1.5700 range.

The below chart highlights how GBPUSD has been stuck in this 200 pip range for nearly 1 month of trading.

Screen shot 2015-08-19 at 06.57.11

The chart below shows us a more intraday perspective and the key levels that GBPUSD traders will be looking for today.

Screen shot 2015-08-19 at 07.06.47

We can see from the above chart that a break below 1.5660 exposes the 1.5620 area support and also 1.5580 may come into focus as a more meaningful support level should the break have some follow through with sellers.

Currently for me the best way to trade this pair is to swing short the 1.5730-47 area with a mindset that we will continue to see the range bound activity in GBPUSD until the September Federal Reserve interest rate decision.

Alternatively another plan I have is to wait until we reach the bottom of the box located at 1.5480-1.500 and initiate a buy position.

Essentially in trading this is called “playing the range” which it my current strategy albeit from very well clearly defined levels.


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