Potential Trade setup for GBPUSD going into FOMC Minutes

Hi friends,

This is an extract from today’s Daily Market Forecast:

We have a very important event lined up for today, FOMC minutes. Investors and traders will be watching this event very closely to seek any tapering related hints. Yesterday, EURUSD broke a tough resistance and traded as high as 1.3450. However, an important point to note here is that there was lack of follow through. 1.3390/80 now becomes support, and we need to see how markets react to it. Market is definitely nervous before this key event.

GBPUSD is trading in a narrow range inside a channel as plotted on the 1H chart shown below. We are looking to trade a potential break of this channel in GBPUSD for a down move. We also have a support at around 1.5650/60, which coincides with the trend line plotted on the chart.

To enter a short trade, we need to break the support and trend line and have a 1H close below the trend line. Once we get a bearish candle pattern, then it would be the right time to jump in the trade. There is a descending trend line on the daily chart as shown below. If we get into the trade, then our initial target should be 4H 20 MA and final target should daily 20 MA. Stop should be triggered on 1H close above the trend line shown in the chart.

Other than FOMC Minutes, we have US Existing home sales data in NY session and Chinese HSBC Manufacturing PMI figure later in Asian session. I expect volatility in upcoming sessions, and if there is any hint or surprise from FOMC, then we can see very strong reaction with follow through in the market. Jackson Hole will also play an important role in coming days in deciding further trend.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURGBP, AUDNZD, GBPCAD, GBPJPY, EURCHF and GOLD.

Get it HERE: Vladimir’s Markets Forecast

Be prepared and trade well friends. Happy trading!