Fundamentally, my directional bias for this pair remains to the downside in spite of a positive GBP retail sales % last Friday and good data on the UK employment situation last Wednesday. A real boost to the GBP could come from a rate hike, but the unanimous vote by the BoE members to maintain rates at their current level of 0.5% signals the UK, like many other countries, is dealing with falling inflation, which in turn is aided by the slide in oil prices. The current inflation level sits at a mere 0.5%. The USD on the other hand did strengthen a lot last week, mainly (but not solely) to the weakening of the EUR. It extended its gains against all the major currencies including the GBP. The news events of the coming week are likely to indicate further USD strength, as the forecasts beat the previous data across the board.
On the technical side, the cable has been ranging in a 190 pip wide bearish channel on the 30M for the last 4 days, testing the upper trendline 3 times and the lower trendline twice. PA broke through the 1.50 handle last Thursday and tested and respected the upper channel line again on Friday. The RSI is far from oversold and we have a Stoch line crossover, so I am now looking to sell this pair. Assuming it will continue its way down, I have marked two profit targets along the way, both just above key support levels. TP1 is equal to the traderisk. When this is hit, I would move the SL to break even and enjoy a risk free trade (essentially trading with the markets money) towards TP2 where I could quintuple my profit. SL goes outside the channel, 10 pips behind the marked resistance level.
There are 175 pips on the line and the trade has a reward – risk ratio of 5.0!
UPDATE: For some reason, the support and resistance lines are not visible in the chart, they are visible in "small view" but disappear when you open the trade idea. I apologise for any inconvenience because of this and have no idea why the lines would not be visible. Resistance is at 1.5020, key support below TP1 is at 1.4946 and key support below TP2 is at 1.4811.
On the technical side, the cable has been ranging in a 190 pip wide bearish channel on the 30M for the last 4 days, testing the upper trendline 3 times and the lower trendline twice. PA broke through the 1.50 handle last Thursday and tested and respected the upper channel line again on Friday. The RSI is far from oversold and we have a Stoch line crossover, so I am now looking to sell this pair. Assuming it will continue its way down, I have marked two profit targets along the way, both just above key support levels. TP1 is equal to the traderisk. When this is hit, I would move the SL to break even and enjoy a risk free trade (essentially trading with the markets money) towards TP2 where I could quintuple my profit. SL goes outside the channel, 10 pips behind the marked resistance level.
There are 175 pips on the line and the trade has a reward – risk ratio of 5.0!
UPDATE: For some reason, the support and resistance lines are not visible in the chart, they are visible in "small view" but disappear when you open the trade idea. I apologise for any inconvenience because of this and have no idea why the lines would not be visible. Resistance is at 1.5020, key support below TP1 is at 1.4946 and key support below TP2 is at 1.4811.
You don´t need to be a weatherman to know which way the wind blows - B. Dylan