Rail Road Tracks in gbp/usd

Monday price action in gbp/usd has been as it usually is. If you monitor how currencies move at specific days of the week, how they open and close, you will surely notice some tendencies. This week was no exception. We saw directional moves during the past week as the cable rose against US dollar for the whole week. The tendency continued on Sunday open. You need to know that in most cases if there was a directional move previous week and market ended moving in that direction you are going to see a reversal on Monday. 

As always there was a false move up during early European session (during Frankfurt open) and the move upwards continued till the start of London session. Market then formed rail road tracks candle pattern and reversed sharply to the downside. I expect some ranging today and possibly tomorrow and then a direction to form. 

There are some important fundamental releases this week, the key one being FED Open Market Committee Rate Decision at 18:00 GMT on Thursday. I doubt if we are going to see anything significant happening before that date, but you should watch UK Consumer Price Index release at 08:30 GMT tomorrow and UK Unemployment change at the same time as CPI on Wednesday. 

BOE Data Should Give Direction for gbpusd

Yesterday saw low volatility in gbp/usd. 53 pips is a very low daily range for the pair. You know how volatile cable can get. It means directional move is coming. We have a good catalyst for that and that is Bank of England interest rate decision that is due at 11:00 GMT today. Of course, nobody expects an increase (to say nothing of a cut). If that happened we would probably see a huge gap in price of the exchange rate of the pair. 

However, any bullish or bearish signs in the wording of the statement can send the price to the sky or to hell. You may see from the chart below that resistance starts at 1.5425 that marks the low of the 7^th of August. Pound bounced of that level at that point and formed a nice bullish candle. It may play as resistance when the release comes out. Intra day support is at 1.5338 (today low). 

Next level of support would be 1.5300 area and resistance would be around 1.5490-1.5500 area. If 1.5490 is overcome the door to 1.5800 (the high of 25^th of August) would open up. Bias is slightly bullish right now. 

British Pound Starts the Week on a Bullish Tone

After two weeks of falling, gbp/usd started the week on a positive note. On Sunday open it gaped down, but quickly came up and did not break lower anymore. It moved towards the low during European session, but formed a bullish w pattern on 15 minute chart and is rising now. You may see that intra day resistance is at 1.5273 level (Friday high). Intra day support starts at an even number of 1.5200 with key support being at 1.5160 (Sunday open low). 

There is no key fundamental data today or tomorrow that might impact exchange rate of the pair. On Wednesday GBP Industrial production is to be released at 08:30 GMT. Even more important data is coming on Thursday at 11:00 GMT. Bank of England interest rate decision is scheduled at that time. I have a hunch that US dollar bullish trend might be over for now and British Pound will strengthen from now on. On Friday inflation numbers from UK will also be carefully watched by market participants. Later in the day traders will also get USD U. of Michigan Confidence data, which should not have big influence on the pair.

Pound is Still Falling against US dollar

Despite the fact that gbp/usd move down got slower, it is still going south. It seemed that there was going to be a reversal today. Why? If you look at 15 minute chart you can clearly see that Monday low did not exceed Friday low. It actually resembled a double bottom pattern. However, during European session today the lows was taken out and new low was made. Yesterday lowest point was at 1.5340 while Friday low stood at 1.5335. Now American session is in full swing and the lowest level today is 1.5304. The fall may continue further.

The best play for such market is, of course, selling rallies. Such an opportunity presented itself right on the London open. Three arrows on the chart indicate a reversal, which shows that counter trend rally is over and price is about to move down again. It is also obvious that 200 ema acted perfectly as a resistance level on 15 minute chart. Just look at those candle pins to see for yourself. 

Neither data from UK, nor from US could stop cable from collapsing. Well, more important news is coming at 14:00 GMT when ISM Manufacturing from US is released. Trade only from the short side till you definitely see a trend change.

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.