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GBP USD Technical Analysis

Sideways escape

Today at 10:30 СЕТ the Bank of England will issue inflation report and hold a press-conference with Mark Carney (the governor). Most market participants expect inflation forecast to be cut and focus attention on Mark Carney's account for the prospective of the Bank of England rate hike. He is supposed to comment on real estate market and mortgage rate dynamics. It's hard to predict the effect it may produce on the pound.

It has slumped by 13% since mid-July and is currently traded in a narrow range. The pound may strengthen against the dollar after the release of British economic data today. Important indicators also become public today in the US: Retail Sales and Jobless Claims at 13:30 CET and Business Inventories at 15:00 CET. Our analysts believe the tentative outlook is positive for the dollar. Careful investors are recommended to wait for the data publication though. To be noted, less important Construction Output will be released in the UK tomorrow. It may underpin the pound (in case today it advances).

GBP/USD

If we look at the H4 chart, the GBP/USD has been traded in a narrow neutral range for quite a long time. The corridor was shaped by the pound rebounding after the sharp fall. We do not rule out that the GBP/USD may finish the sideways trend moving higher, backed with today's positive macroeconomic news. Consequently, a “bullish” momentum may continue as the fractal resistance is breached at 1.52985: a buy pending order may be placed there. Stop loss may be placed at 1.5195, indicated most recently by Donchian channel. This mark can be regarded as the support line at the moment. After pending order activation, Stop loss is to be moved every four hours near the next fractal low, following Parabolic or Donchian signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets Stop loss level without reaching the order, we recommend canceling the position: market sustains internal changes that were not considered. Since our forecast relies on fundamental analysis, we leave the room for opening sell positions. It is possible, if the Bank of England statement and American statistic fail to meet expectations. In this case the fractal levels indicated are to be swapped.

 

Position Buy
Buy stop above 1,52985
Stop loss below 1,5195


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