Daily Analysis: Observing GBPUSD for a short term sell opportunity

GBPUSD has been climbing higher for the past couple of days, after the positive employment data for the UK. There is a down-move trend line and several resistances on the way up as shown in the 4 hour chart below. RSI is also coming closer to the extreme level, and there is a divergence forming on the 4 hour chart as well. So, I think we should look forward for a short term sell opportunity.

Looking at the 1 hour chart of GBPUSD, the pair is forming a continuing divergence. The pair may continue to move a bit higher, and then move down again. We may look to enter a sell trade once the pair moves higher, makes a stop at any of the resistance levels, forms a bearish candle pattern along with RSI coming closer to extreme level on hourly chart and creates a divergence on both 4 hour chart (bearish hidden) and the hourly chart (bearish continuing).

Alternatively, if the pair does not move higher, then we may look to enter a sell trade once the pair breaks and closes below the up-move trend line and support level as shown in the hourly chart below.

Initial target should be around 1.6060 and final target could be around 1.6030. Stop should be placed above the next resistance in the first scenario and above the broken trend line and support for the second scenario.

Reviewing Friday’s events and trades
Friday turned out to be another bad day for the US dollar. The pairs like EURUSD, GBPUSD and AUDUSD traded higher at the end of the week. Fundamentally, Euro zone inflation was confirmed at 0.7% in October. Furthermore, US industrial production data missed the expectations of 0.2% and declined from 0.7% to -0.1%. NY empire state manufacturing index and US import price index too dived down to -2.21 and 0.75 respectively. Other than this, US wholesale inventories data came as expected at around 0.4%.

Fundamental Outlook for the day
Today, there are no major fundamental events scheduled. In the European session, Euro zone trade balance data was released, which missed the expectations of 14.2B. Later in the US session, we have Canadian foreign securities purchase data and US Treasury International Capital (TIC) Net Long-Term Transactions data lined up. Other than this, FOMC member Dudley will be speaking later in the day. Furthermore, RBA Monetary policy meeting minutes are scheduled to be released in the next Asian session.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, EURJPY and USDCAD.
Get it HERE: Vladimir’s Markets Forecast

Have a Green week friends. Happy trading!

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