28 Aug 2009

GBP/USD Analysis:
Pound continue to plunge throughout European trading and US trading period. The down was largely caused by UK Prelim Business Investment, which was reported at a much lower value.

But, without news, there was a sudden spike at 0200hrs to 0230hrs SGT, bringing the pound back to near 1.63 from a low of 1.616.

This morning, UK Consumer Confidence opened with a slight less than expected result, but caused not much impact.

All eyes will be on UK Revised GDP at 1630hrs SGT. Economists don’t expect a change from the initial read of a 0.8% contraction. A better result will help the beaten Pound.

The spike brought the pound back a support level of 1.62. Now it is resisted by 1.63. The 1 hour chart showed WMA5 between EMA55 and EMA100, meaning that if the price action goes up above EMA100, most likely the pound will stop around 1.640. Breaking 1.64 will help move the pound higher.

On the short, the level of support has moved up to 1.625, the next level is still 1.612.

Trend: Up.

Morning trading will be thin, most likely range within 1.64 and 1.62. Either break in these level gives the pound a direction to follow and continue. CCI look up, so if pound do break 1.633, it will be good to take a long towards 1.64 and wait for a further breakout up. GDP news may disrupt the movement up, so depends on when the breakout occur.

Watch the daily WMA5. If it break below EMA100, it will be all short towards 1.61, then 1.60

For those whose long position is taking profit, you may want to TP around 1.638 or for more conservative, close the trade now.