Tuesday was not a good day for sterling traders, or, more precisely, not for traders of the GBP/USD as this major pair was torn between a stronger pound on the one hand, and continued dollar strength on the other hand. Thus, day traders had to struggle with false breakouts and unsteady movements.
The pound tried to recapture 1.40 on positive Brexit developments but has repeatedly bounced off that important barrier. Consequently, we still consider the 1.40-threshold a crucial resistance which needs to be significantly broken in order to push the pound higher. With the price development in GBP/USD being stuck between 1.4015 and 1.3965 we now see an interesting chart formation which requires our attention.
GBP/USD
Prices narrowed, formatting a short-term symmetrical triangle which points to upcoming price breakouts as well as larger currency moves. While the overall trend is upwards, we see that the secondary trend is downwards whereas the most recent trend is upwards again. Based on that chart picture we now prepare for short-term price breakouts.
It will be an interesting trading day for sterling traders as we have the U.K. Labor Market Report scheduled for release at 9:30 UTC followed by several Bank of England speakers, among them BoE Governor Mark Carney, who will all be testifying on the inflation report before the U.K. Parliament.
From the U.S., we have the FOMC minutes from the Fed’s Jan. 30-31 meeting scheduled for release at 19:00 UTC. The minutes, however, are not expected to leave a lasting impact this time around as it was the last meeting under the purview of former Fed Chair Janet Yellen. Market participants will pay less attention to the words of an outgoing Fed Chair.
The euro fell victim to a strengthening U.S. dollar and thus, the EUR/USD trended lower, providing short traders a good profit. We now expect the EUR/USD to trade between 1.2350 and 1.2270.
Here are our daily signal alerts:
EUR/USD
Long at 1.2360 SL 25 TP 20, 50
Short at 1.2315 SL 25 TP 20, 40
GBP/USD
Long at 1.4025 SL 25 TP 20, 60
Short at 1.3965 SL 25 TP 30, 70
We wish you good trades and many pips!
Disclaimer: Any and all liability of the author is excluded.