Earnings and Labour conditions information is about to be released from the UK and it is in that line that we should look at what is expected leading from the Chart. Economists agree that this quarter’s earnings will change by 2.3% just like June’s quarter while the Claimant count change will increase by 1.9K this month. With this, we should analyze the market for signs of a GBP weakness and maybe trade by the consensus but as always the market is full of surprises and data might come in weaker or stronger than expected.
The weekly chart which is my lead and it points to a strong buy since last week’s bullish bar closed as a bullish engulfing bar and broke away from the all time low. To add further evidence of strength, the OBV, which measures the open interest, showed that there were more buyers than sellers for this pair. The weekly stochastics is also oversold and printed a buy signal last week. Yesterday’s CPI data came lower than expectations and as expected since price was overextended in the daily chart, price trended lower but reversed in the NY session. The tendency for a down move is outweighed by the buyers who are adding to their longs in the longer time frame. If there is a break above that resistance line at 1.7680, then the next target should be 1.9 and all you have to do is to move your stops to break even and ride with the bullish trend.
Today, entries should be made in the 15 min chart as usual and positions of stop losses should be determined from the 1HR chart since support and resistance points are clear. So today, trade as follows:
Strategy 1: Buy Stop
Buy Stop: 1.4660
Stop Loss: 1.7530
Take Profit: 1.7860
Strategy 2: entry in 15 min chart entry with oversold stochastics
Buy Limit: 1.7510
Stop Loss: 1.7450
Take Profit: 1.78
Otherwise, have a good trading day and always trade with a stop loss.