The Pound weakened last week with some recent Brexit discussion and speeches which always seems to create the unstable environment that usually plagues the GBP. Some lower than expected UK Eco data didn’t help the GBP either. Also, with some good PMI data coming out of the U.S. and some “Hawkish” statements coming out of the Fed, it would appear that the GBP/USD pair is in for a further and substantial drop, right?
In my humble opinion…NOT SO FAST! There are also “Hawkish” statements coming out of the BOE by some of the Committee members, and the big boss himself, Carney. They all point toward a Nov 2 rate hike which comes more than a month before the Fed add their projected hike.
However, there is one concern coming from the ECB, and that’s a possible confirmation of them Tapering Asset purchases in their Oct 26 meeting, which by the way, they’ve been hinting at, and will continue to do up to the meeting.
Another possible development that might disrupt things is Trumps continuing & escalating tweet feud with Kim Jong Un. So with that being said, I’m hoping (for this trade anyway) the German Merkel 3 way party and Catalonian situations keep the Euro at bay while they work all that out, and Trump gets banned from tweeter. (~_*)
One thing has become clear, they’re all normalizing, but nobody wants their currency to appreciate and they’re all working in tandem, so at least we can count on that.
To me that means, read between the lines, then see if the technical supports your interpretation and timing, which brings me to my trade plan. >>>>>
We’ve had some nice retracements in most of the popular currencies, that are NOT USD, EUR, and JPY, so in this trade plan I’ve chosen a Bullish set up in the GBP/USD pair. I’m anticipating, and will be looking for in smaller time frames, a reversal pattern around the 1.2980 area to enter long toward a target around the 1.3500 area. The entry point is at a combination of the Monthly S1, the 78.4 Fib retracement, and the bottom of the Bullish trend channel that has been steady since Jan. This is also the ‘post’ Brexit initial support area, before it fell into the teens. The pair is oversold nicely on the daily, so now’s the time to start looking for oversold stochs in the lower timeframes to line up. I stayed conservative on the target area, and a 3 monthly pivot point move, instead of the usual 4. I only make those adjustments when I feel they’re overly stretched due to the previous months large moves. I tend to do the opposite, when the previous month consolidates. I’m also anticipating a double top due to the upcoming Fed hike in Dec. Happy Pip hunting!