Shorted from 1.309 as per Monday's report...
Of late, we can see that the GBP/USD extended higher, reaching fresh highs of 1.3223 in the process. As a result of this, weekly price is now seen trading beyond the walls of supply at 1.3120-1.2957. However, technically speaking, it is far too early in the week to tell if this move north suggests further upside to the Quasimodo resistance planted at 1.3371.
Down on the daily picture, yesterday’s move brought the unit into contact with supply drawn from 1.3278-1.3179, which as we mentioned in Monday’s analysis, is overflowing with confluence. We have a trendline resistance taken from the high 1.3477, a channel resistance drawn from the high 1.2903 and two converging AB=CD (green/orange arrows) 127.2 Fib extensions at 1.3222/1.3223 (taken from the lows 1.2811/1.2365). Also, for you RSI fans, there is daily divergence in play, as well.
Moving across to the H4 timeframe, price recently tested an AB=CD bearish pattern (black arrows) that completes a few pips above the 1.32 handle at 1.3207 (the 127.2% Fib ext.). This – coupled with the daily structures mentioned above – forms incredibly attractive confluence.
Our suggestions: In light of the above, our team is now short from 1.3209, with conservative stops planted at 1.3280 (two pips above the top edge of daily supply). Ultimately, we’re now looking for H4 price to cross back below the 1.32 handle, and touch gloves with the mid-level number 1.3150. It will be here that we’ll consider reducing risk to breakeven.
Data points to consider: UK manufacturing data at 9.30am. US ISM manufacturing PMI at 3pm GMT+1.
Down on the daily picture, yesterday’s move brought the unit into contact with supply drawn from 1.3278-1.3179, which as we mentioned in Monday’s analysis, is overflowing with confluence. We have a trendline resistance taken from the high 1.3477, a channel resistance drawn from the high 1.2903 and two converging AB=CD (green/orange arrows) 127.2 Fib extensions at 1.3222/1.3223 (taken from the lows 1.2811/1.2365). Also, for you RSI fans, there is daily divergence in play, as well.
Moving across to the H4 timeframe, price recently tested an AB=CD bearish pattern (black arrows) that completes a few pips above the 1.32 handle at 1.3207 (the 127.2% Fib ext.). This – coupled with the daily structures mentioned above – forms incredibly attractive confluence.
Our suggestions: In light of the above, our team is now short from 1.3209, with conservative stops planted at 1.3280 (two pips above the top edge of daily supply). Ultimately, we’re now looking for H4 price to cross back below the 1.32 handle, and touch gloves with the mid-level number 1.3150. It will be here that we’ll consider reducing risk to breakeven.
Data points to consider: UK manufacturing data at 9.30am. US ISM manufacturing PMI at 3pm GMT+1.
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