GBP/USD – Playing for a flag break and another leg higher to target 1.55
Despite an early gain in GBP on the SABMiller (L:SAB) deal, both headline and core CPI from the UK undershot expectations, surprising the markets on the downside. Cable fell sharply from intra-day high of 1.5387 to current level of 1.5250 levels. With a negative reading of CPI figures, the BOE will take a closer look at Average Earnings data and employment reports due today so as to consider when to raise interest rates.
Sharp reversal from 1.54 supported at 1.52 while 1.53 caps intraday upside reactions expect a retest and breach of 1.5150. A sustained move over 1.53 targets retest of 1.54 en route to 1.55. 1.53 key battle ground today.
Trade Idea
- I want to position long on a break of 1.5350 targeting a test of 1.55 leaning against the 1.53 pivot
- The set up is a bullish flag pattern with similar parameters to the same set up in early/mid September.
- This trade is supported by bullish Order Flow and a high probability technical pattern.
