31 July 2009

GBP/USD Analysis:
The Stocks market rally again.
Pound is kept withing range of 1.655 and 1.660, failing again to break high. On the down side, it is supported strong by daily EMA21 at 1.640/1.634

News from www.investica.co.uk says that result may not be as expected and spur a selling of EUR/USD

From www.bloomberg.com, economy may show recovery from GDP results.

According to www.forexcrunch.com the result from GfK Consumer Confidence this morning has shown that the confidence has dropped (actual result).

There is no news this afternoon that may affect the pound, so it is all technical. The GfK confidence result this morning may weaken the pound till the news for US GDP at 2030hrsSGT.

Based on technical, pound is strongly resisted at 1.660 (see daily chart). It is also supported by EMA21 (see daily chart) now at 1.640
If the sentiments by GfK confidence is bad, lets observe the morning market. From the hour chart, we see no movement yet. But clearly during the night, the pound hovers between 1.653 and 1.647. Going lower see that pound is resisted by EMA55, EMA100 and EMA200 at around 1.6440 and that form the first level of support, following that we see support at the low of 30July 0700 candle at 1.6340.
General trend is from CCI which show a weak up movement. Meaning it has weakness for a potential reversal.

Trend: Not clear in the afternoon unless GfK triggered strong movement else direction should be clearer until US market for GDP news.

Trading Breakout Up
One way to trade is to assume a breakout during the afternoon trading hours, but this is risky because of GfK confidence news. Placing a long at 1.653 is good, but at 1.660 we will faced the strong day resistance. Sl should be at either 1.6440 or 1.6340. This gives little support as CCI does not strongly confirm the movement.

Trading Breakout Down
To have a good break out, pound must clear the daily EMA21 at 1.640. This is good from the 1 hour chart, that show the clearance from the EMA100 and EMA200 from the 1 hour chart. There is no news that currently support the up movement of the pound. TP will be good at 1.634 or at daily EMA55 at 1.6268., SL at 1.652.

Trade Rebound Down
Assuming strong resistance at daily resistance line at 1.660. We can placed a short at 1.656, TP at EMA21 at 1.640, SL at 1.663. What support this trade is that GfK triggered a morning and afternoon spike, but by GDP news, it retraces.

Trade Rebound Up
Again GfK bring the pound down and retrace to 1.64 and 1.634 region and good GDP news rebound the pound up. Long at 1.635, TP at 1.6440( 1hour EMA200), SL at 1.628 (daily EMA55 support).

So which choice?
Trading conservative, I will choose to trade Rebound Up. Long movement is not clearly evidence and it capped now at 1.655 and 1.660 region.
Trading Breakout Up is also good, but offer little profits again because of the resistance at 1.655 and 1.660.
Trading Rebound Down is no good, because pound look good going up with all the stocks market rallys.
Trading breakout Down need to clear daily EMA21 for clear direction, else it is a strong resistance.