I haven’t been a big fan of trading the GBPUSD in 2016, mostly due to the June 24th Brexit vote which caused a lot of volatility both before and after the event.
However, a wedge pattern appears to be developing on the 4-hour chart that could prove worthwhile over the coming sessions. Of course, given the broader downtrend that’s been in place since mid-2014 I’m only interested in selling opportunities.
A 4-hour close above the 1.2330 handle would negate the pattern. With that said, buyers wouldn’t likely get very far considering a parallel can also be drawn from wedge support which would act as resistance and possibly carve out a bear flag.
As of right now, I’ll be watching for a 4-hour close below wedge support which currently sits near 1.2190. A move below this level would expose the October 7th flash crash low and critical support level at 1.2000.
Aside from BOE Governor Carney’s speech on Tuesday at 10:35 am EST, Thursday looks to be the most eventful day for the pair. At 4:30 am EST we have UK prelim GDP for Q3 followed by US core durable goods orders and unemployment claims at 8:30 am EST.
Do keep in mind that the US also reports advance Q3 GDP at 8:30 am EST on Friday, which should be of considerable interest given the rampant speculation about the health of the US economy in recent months.
Want to see how we are trading this setup? Click here to get lifetime access.