Technical Analysis GBPUSD : 2015-04-23


Expecting the end of sideways movement

On Wednesday the minutes of April 9 Bank of England Monetary Policy Committee meeting were released. The records indicated the policymakers were more bullish on the prospects for higher inflation as they expected the picking up of growth in euro-zone to increase demand for British exports, helping the Pound. The policymakers noted that the sharp fall in inflation in recent months could be partly the result of Pound strength and the inflation may rebound more strongly when downward pressures on prices subsided. The release of minutes resulted in a boost to the bullish momentum that has pushed the Pound higher in the last week. On Thursday economic data including retail sales for March will be released. We expect an increase in volatility after the data are released, with anticipated rise in retail sales providing additional bullish momentum for the Pound.

GBP/USD

The GBPUSD pair had been moving within a bearish trend which is confirmed by the slope of the long term Donchian channel and the movement of the RSI-Bars indicator in the downtrend channel. But then it retraced on March 18 as it bounced from the lower channel and started sideways movement. On April 13 the pair started rising, with the RSI bars indicator and later also the Parabolic indicator confirming the new uptrend. We deem the bullish momentum will continue and a pending order to buy can be placed above 1.5054, which corresponds to the upper Donchian channel. The stop loss can be placed at the last Parabolic signal, which has formed at 1.4610. After pending order placing, the stop loss is to be moved every day near the next fractal low, following Parabolic signals and Donchian channel. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss without reaching the order, we recommend cancelling the position: market sustains internal changes that were not considered.

PositionBuy
Buy stopabove 1.5054
Stop lossbelow 1.4610

Note

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Call