Forex Trading Alert: GBP/USD Tests Last Week's High

By: Nadia Simmons & Przemyslaw Radomski | Fri, Oct 23, 2015
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Forex Trading Alert originally published on Oct 22, 2015, 6:49 AM


 

Earlier today, official data showed that British retail sales increased by 1.9% in the previous month, beating forecasts for a gain of 0.3%. Additionally, year-on-year, retail sales rose by 6.5% in September, above expectations for a 4.8% gain. On top of that, core retail sales (without automobile sales) jumped 1.7% last month also beating forecasts for a 0.3% increase. Thanks to these bullish numbers GBP/USD rebounded sharply and climbed to the last week's high. Will we see higher values of the exchange rate in the coming days?

In our opinion, the following forex trading positions are justified - summary:

EUR/USD: short (a stop-loss order at 1.1887; the downside target around 1.0938)
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none


EUR/USD

EUR/USD Weekly Chart
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The medium-term picture remains almost unchanged as EUR/USD is trading below the long-term red declining resistance line.

What can we infer from the daily chart? Let's check.

EUR/USD Daily Chart
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On Tuesday, we wrote the following:

(...) Despite this increase, we think that as long as there is no daily close above this resistance line, another attempt to move lower is more likely than not.

Looking at the daily chart, we see that currency bears pushed the pair lower as we had expected. With this downward move, EUR/USD approached the lower border of the blue consolidation (based on the Monday's low), which suggests that if the exchange rate breaks below it, we may see a decline to (at least) 1.1236, where the size of the downswing will correspond to the height of the formation.

Very short-term outlook: bearish
Short-term outlook: bearish
MT outlook: mixed with bearish bias
LT outlook: mixed

Trading position (short-term; our opinion): Short positions with a stop-loss order at
1.1887 are justified from the risk/reward perspective.


GBP/USD

GBP/USD Weekly Chart
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On the daily chart, we see that GBP/USD invalidated small breakdown below the red support/resistance line (based on the Aug 25 and Sept 18 highs), which triggered a sharp rebound earlier today. With this move, the pair approached the upper border of the consolidation, but then gave up the gains, which means that as long as here is no breakout above this resistance further rally is questionable - especially when we factor in the situation in the medium term (on the chart below).

EUR/USD Daily Chart
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From this perspective we see that GBP/USD extended gains and approached the upper border of the red declining trend channel, which suggests that the space for further rally might be limited.

Finishing today's commentary on GBP/USD please note that the daily CCI and Stochastic Oscillator generated sell signals, which could encourage currency bears to act and result in another test of the lower border of the consolidation in near future.

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment.


USD/CAD

USD/CAD Weekly Chart
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The first thing that catches the eye on the weekly chart is an invalidation of the breakdown under the 2009 high, which is a positive signal that suggests further improvement.

What impact did this move have on the daily chart? Let's check.

USD/CAD Daily Chart
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On Tuesday, we wrote:

(...) currency bulls managed to invalidate the breakdown under the green zone, which suggests an increase to around 1.3078, where the last Tuesday high is (especially when we factor in buy signals generated by the indicators).

As you see on the daily chart, currency bulls not only took the pair to our initial upside target, but also managed to push the pair to the 50% Fibonacci retracement. Although this resistance level triggered a small pullback earlier today, the current position of the indicators in combination with the medium-term picture suggests that another attempt to move higher should not surprise us. If this is the case and the exchange rate moves higher, the next target for currency bulls would be around 1.3216, where the 61.8% Fibonacci retracement is.

Very short-term outlook: mixed with bullish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment.

Thank you.

 


 

Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
Forex & Oil Trading Strategist
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Nadia Simmons

Nadia is a private investor and trader, dealing in currencies, commodities (mainly crude oil), and stocks. Using her background in technical analysis, she spends countless hours identifying market trends, major support and resistance zones, breakouts and failures. In her writing, she presents complex ideas with clarity that enables you to easily understand market changes, and profit on them. Nadia is the person behind Sunshine Profits' 3 premium trading services: Forex Trading Alerts, Oil Trading Alerts Alerts, and Oil Investment Updates.

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons's reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer: All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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