GBP/USD – Momentum fade into overhead supply
GBP was flat yesterday after Wednesday’s acceleration to the upside, as there was no fresh data to guide. Separately, German Chancellor Merkel said she will work constructively with the UK on EU reforms but warns that some principles, such as the free movement of people, are non-negotiable.
While 1.5380 supports downside reactions expect a grind higher to test 1.56 symmetry objective. Watching for a momentum failure into the 1.56-1.57 zone similar to mid September, whereby intraday price action moves sideways more than straight up as witnessed earlier this week.
Trade Idea
- I am going to monitor intraday reversal patterns as we test 1.56 symmetry objective. I am expecting supply to emerge between 1.56-1.57, to venture short leaning against 1.58.
- Will initially play for a correction to the impulse move up this week.
- Monitor intraday activity towards 1.54 a failure here will suggest the potential for larger reversal as per the chart below.
- I will also be monitoring FX retail sentiment looking for the market to turn increasingly bullish into resistance zone.
