GBPUSD jumped higher yesterday after the better than expected employment data, and BOE’s remark that 7.00% employment rate target may be reached in Q3 2015 rather than mid-2016. The pair is currently facing a resistance at around the 1.6060/80 region. There is also a classical band-to-band move along with a bearish hidden divergence on the 4 hour chart as shown below. So, I think we should look forward to sell rallies in GBPUSD.
Looking at the 1 hour chart, we have over 20 candles ride for GBPUSD. However, the pair has not yet formed a bearish divergence on the hourly chart. So, we will wait for the pair to make a push higher, create a double top or a new high and form an hourly divergence to enter a sell trade. Once we have a combination of 4 hours bearish hidden divergence and 1 hour continuing divergence, then we will jump into a sell trade.
Initial target should be around the lower band of Bollinger, and final target could be around the 4 hour chart 20 moving average. Stop should be placed above the next major resistance.
Reviewing yesterday’s events and trades
Yesterday, was an eventful day, especially, for the pound crosses. There were two major fundamental releases for the UK, including employment data and BOE’s Inflation report. The unemployment rate and jobless claims for the UK fell to 7.6% and 41.7K respectively. Later, BOE released the inflation report in which they upgraded their forecast for the unemployment rate and rate hike in the future. This caused GBPUSD to rally through the 1.6000 figure. The pair traded as high as 1.6065. EURUSD and other risk correlated currencies are also trading higher after the Fed’s Yellen remarks on the monetary policies.
Fundamental Outlook for the day
Today, US jobless claims will be released in the NY session, which is expected to decline from 336K to 330K. US trade balance data and Bloomberg consumer confidence figure will also be released later in the session. Earlier in the European session, Euro zone composite GDP figures will be released, and the market will be eying this event closely as to know whether the growth in the Euro zone is taking hold or not. Any disappointment will put a lot of pressure on the Euro. Furthermore, UK retail sales data is also lined up at GMT 9.30 AM.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, NZDUSD, USDJPY and GOLD.
Get it HERE: Vladimir’s Markets Forecast
Trade carefully friends. Happy trading!
