6 May 2014; GBPUSD

6 May 2014; GBPUSD

The news to watch is at 1630hrs SGT on UK PMI.

The pound has been going up with support at 1.686/ 1.686 (1 hour EMA200). The news will determine whether GU will ascend further towards 1.70/ 1.6990 the psychological level. Next is 1.720 / 1.718 the October 2008 resistance line.

UK has been doing well in its Purchasing Manager Index  - It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy;

It has been above 50 and reaches a height of 60.5 in Sep 2013, but decline to 57.6 last month. The decline is gradual, but above 50 shows that the UK is still buying. In contrast, US PMI is also above 50 and now stands at 54.9 last month. The trend is that it is on the up since it drop to 51.3 in Jan 2014.

So both economy looks good. The stocks market indexes are moving up. UK is slowing down, US is steadying up, with UK buying more than US.

Most advice is to stand at the side line or favoured an attempt of the GU to hit 1.70.

GU reaches a new high of 1.692 last week, so a good sell is at 1.695, take profit fast but remove position if price breached 1.705. Even lower is at 1.6885 and take profit at 1.6876 (1 hour EMA 21/55 line support line)

Alternatively buy at 1 hour EMA200 line at 1.6860. If support is not breached then wait or release by batches the purchase at 1.6870, 1.6880 and 1.6890. Also wait and buy at daily EMA21 line at 1.6835.

If GU goes beyond 1.705 it is a break up else 1.682 is a break down.