16 Oct 2009

GBP/USD Analysis:
The pound did an extraodinary breakout gaining against the Euro and the dollars, achieving more than 250pips.

There are no major news, so why? Speculation around the Bank of England (BOE) decides to ease up on its quantitative easing. When a central bank stops its quantitative easing policies, it typically increases the value of the currency.

In US, unemployment rate fell, giving a boost to the DoW and strength of a economic recovery as minuted by FOMC on Tuesday.

Has the pound break high enough to gain momentum to reach hihger highs? Technically, not yet. WMA5 hit above EMA200, but still have EMA55 and EMA100 to clear on its daily chart. The shot up also meant some consolidation may occur.

Resistance is at 1.639/40 region before consolidation, the next is at 1.645
Support on the other hand is at EMA55/EMA100 region at 1.62, then 1.612.

Trade Plan suggestion: Take some profit for those who have long at 1.639/40 region.
Not a time to short. If consoldiation does take place, place a long at 1.62 or 1.612 region.