5 Aug 2009

GBP/USD Analysis:
After a good run on Monday, there is inevitable profit taking, as seen in the slow down on yesterday.

Pound doji around 1.693, without breaking the peak at 1.700.

More good news will follow today. UK Confidence is up this morning. In the afternoon, we have Halifax HPI, a leading indicator of the housing industry's health because rising house prices attract investors and spur industry activity. News released at 1430hrs SGT. Then at 1630hrs SGT UK Services PMI.

In the evening, US ADP Non-Farm Employment Change at 2015hrs SGT and 2200hrs SGT US ISM Non-Manufacturing PMI.

The expected results is better than the forecast, indicating and supporting the fact that the economy has recovered. If so, these will give support for the pound to gain breakout at 1.700.

On the daily chart CCI is very overbought, suggesting a possible consolidation. Support is strong at 1.682 and 1.6705 region. Unlikely for it to reach there today. Possible will be retracement using Fib retracement to 1.685(50%) and 1.682(68%) from peak of 1.7004.

Of course, resistance is at 1.702 and 1.75 (the mid point towards 1.82).

Trend: up

How to trade then? 1.693 has been the mid point for yesterday doji formation. We can trade rebound, given that the possibility of a up trend is high.