Trading opportunities on currency pair: on Friday the pound/dollar closed down. A pattern on the candle indicating a weakening of the pound has started to form. As I see it, it’s likely that the rate will return to the trend line at 1.5455. A close of the daily candle above 1.5585 will see the see the scenario cancelled out.
The last time I did an idea on the GBP/USD it was 7th September. Back then the UK pound managed to pass two supports. I expected that the euro/pound cross would break the upper limit of the channel and the pound/dollar would shift to the 1.4646-1.4879 target zone. The cross kept trading under the resistance. The forecasted scenario for the fall was supposed to cancel out with any close of the daily candle above 1.5275.
What’s of interest at the moment?
Over 11 days the pound/dollar has renewed to 1.5658. Friday’s candle closed with a long shade and covered Thursday’s body by 76%. In the second half of the day, the dollar rose after the ECB’s Benoît Cœuré and the Bank of England’s chief economist, Andrew Haldane, made speeches. Coeure announced that the ECB is ready to extend its quantitative easing measures where necessary and Haldane said that any next move by the BoE with regards to interest rates could see them lowered.
In sum, we have a similar picture to that of 7th September, only now the pattern is indicating a weakening of the pound. As I see it, it’s likely that we’ll see a return of the rate to the trend line at 1.5455.
On Monday the market often moves against Friday. If we’re to see any further fall of the pound, the rate shouldn’t move upwards and should close above 1.5585. Ideally, we would like to see a correction that finished at 1.5570.
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