Yesterday we saw a stream of US data flowing in and surprisingly, nothing happened to the anticipated direction of trend. The USD continued to gain ground against the kiwi despite the weak ISM Non-manufacturing PMI which came in at 55.5 against 56.0e and even though the ADP Non-employment change was not that robust-at 179K from last month’s 176K the USD continues to surge. Today being the MPC and Mark Carney’s day, the market should be quite till 1100HRs GMT today where we expect full volatility because many players are anticipating a rate cut from 0.50% to o.25% and perhaps an increase in asset repurchases by BoE. If that happen, there will be increase of demand for both the USD and Yen so I recommend we short both currencies.
To the charts then:
In my opinion I’m seeing a slow formation of the M formation and right now we are just at the top of that last leg. Price is reversing from the resistance zone which coincides with May’s highs and from last month Fibonacci, price action is reversing from the 23.6 level which is a confluence zone with the Fibonacci 38.2 yearly level. So, this is surely a region of resistance.
What we shall do today is a follow up of yesterday, just continue shorting this pair and follow it with a 50 pip trailing stop. If you are not in the trade already, set today’s trade plan as follows:
Sell Limit: sell anywhere if price retraces to the 61.8 Fibonacci level in the 15 min chart-this is around 0.7175
TP: At your discretion but ensure there is a risk reward ratio of 1:2 or 3
Otherwise have a good trading day.