Yesterday UK CPI data came in higher than expected and this lead to the GBP strengthening and breaking below that 7 day support at 0.8960 and this to me meant price could trend even lower this week. The prospects of more easing by BoE is even under more doubt after this release and what will be the acid test for this likely bear move is today’s UK Claimant change and earnings report scheduled in the London session. Economists expect earnings to rise by 2.4% this quarter while the number of individuals seeking first time benefits to rise to 3.4K for last month.
Today we then watch these two readings carefully while maintaining our short bias. In the charts, the next possible support if price trend lower will be at 0.87 where there was visible support/resistance and price moved sideways after Brexit.
The most practical way to trade today moves is to short at any of the short term resistance lines highlighted in the 15 min chart and trail your profits. These levels come in at 0.8960, 0.8990 and 0.9015 but the most likely reversals areas and continuation of trend will be around 0.896-0.899 when price would have retraced almost 80% from yesterday’s low.
So, trade as follows:
Sell limit: 0.896-0.899
Stop Loss: 30 pips from sell point
TP: Trail your profits
Otherwise, watch out for today fundamentals streaming in from the US and most importantly, watch out for Governor Poloz BoC data.
Have a wonderful trading day.