Euro is in a tight range before making a move

As expected eur/usd went down yesterday after ECB chief Mario Draghi started giving a press conference. The move was over 100 pips in over 15 minutes. Impressive! More that type of speeches! Ok, today, if you look at 15 minute chart you will see that the pair is in a very tight range. What does that tell us? That there is going to be a breakout either direction. As we expect the downtrend to continue we are waiting for the low of the range to be broken to enter a short position. Yah, that is a breakout trade and those do not work out that often, but looks like this one will due to the direction and a move up towards the high of the range, which has already occurred during Frankfurt open.

The move will probably occur sometime after London open. On the other hand, we have Non Farm Payrolls (NFP) during US session and as you know these tend to create tremendous volatility across the board. If the move does not materialize by then I will probably remove my short order. On the other hand, smart money can move price down and take profit on the shorts after the release. Anyway, let’s not speculate, but wait for the event and see what happens. 

Downtrend in gbpusd May be Over

After falling the whole week, gbp/usd may be turning around this week and go up. If the pair fails to break Friday low, we may wait a few pushes up this week. There are two levels of support down. The first one is Sunday open low which was made in the first 15 minutes on the open and then cable rallied and formed a high of 1.5436, which failed to be broken on Frankfurt open. Pound briefly went below Asian low 1.5399 by one pip before running sharply upwards. We can still expect a retracement to 1.5380 level, which I expect to hold. The next level of support is Friday low: 1.5335. 

Resistance is today’s high (Frankfurt open high) at 1.5437 (200 ema and sma are blocking the way upwards), followed by 1.5490 (same indicators on 30 minute chart) and 1.5508 (the high of 27^th of August). 

There is no key fundamental news today that might affect exchange rate of the pair. Tomorrow will see: GBP Net Consumer Credit, Net Lending Sec. on Dwellings, Mortgage Approvals and most importantly Markit UK PMI Manufacturing SA all coming at 08:30 GMT. 

Key data from United States will be: USD ISM Manufacturing coming at: 14:00 GMT. 

British Pound bulls triumph on Frankfurt open

Pound rallied against US dollar on Frankfurt open. This is often the case when 6:00 GMT hits the clock. However, Frankfurt rallies are often known as Frankfurt fake outs. If you look at gbp/usd chart below you will see that reversal candle is also in formation. 

London open is due in 10 minutes and breakout may turn to be real. However, we need to see a push through 1.5700 level in order for a breakout to be confirmed. I would personally wait either for a reversal sign or for a continuation pattern set up. 

Stop loss orders should be tight. There is no major news that may rock the market, so if the move is real it will continue running on expectations for a rate hike from BOE in the nearest foreseeable future. 

Anyway, I do believe the picture will clear up before US session. Possibilities to buy the pair will increase if it dives below today’s Asian lows of 1.5640. Stronger intraday support is seen at 1.5625 level where 200 sma on 15 minute chart currently is. Intraday resistance is at an even number of 1.5700. Strong short term support is at 1.5580 where 200 sma on 1 hour is.


Possible Frankfurt fake out on 15 minute chart in gbp/usd