Technical Analysis GBPUSD : 2014-05-08


Good afternoon, dear traders. Today at 13:00 (CET, server time), we will see the (Asset Purchase Facility) from the Bank of England. They will publish the amount of funds spent for assets purchasing, including long-term bonds in the open market. This indicator increase leads to the national currency weakening and it is a harbinger of the base rate reduction. The interest rate level will also be published at the same time. In this regard, we would expect a new market momentum for the British currency.

We continue to analyze the GBP/USD for the H4 timeframe. There is a consistency of the D1 and the H4 observed on the chart. Both trends are under bullish influence. The rising H4 support line is confirmed by the ParabolicSAR. Nevertheless, the risk level is to be fixed below the last indicator values at 1.69023. The “equilibrium candle” model was followed by the "hammer" (highlighted in yellow in the chart), which indicates that the correction is over. The PivotPoints channel shows the consolidation, which heralds a new significant momentum. This effect is known as "the calm before the storm".
It is worth to note that the RSI-Bars oscillator is the key indicator as it is usually performed during any sideways movement. The trend oscillator channel is rising, which confirms the price movement direction. However, we should wait for the Bollinger-Bands reversal upwards. In our opinion, this may happen after crossing the resistance at 68.90756.

The GTC buy order is recommended to be placed below the last resistance level at 1.69938. This level crossing is likely to coincide with the oscillator resistance breakthrough, what will need to be confirmed. The first preliminary target is defined by the PivotPoints historical resistance values at 1.70230. This value is below the first Fibonacci level of 161.8% and it is suitable for conservative traders. The SL is recommended to be moved after the ParabolicSAR every 4 hours. Thus, we optimize the return/risk ratio during the market changes. It is recommended to cancel the GTC buy order if the price crosses the SL level earlier.

Directionup
Position openingabove 1.69938
Preliminary target below 1.70230
Preliminary SLbelow 1.69023

Note

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