Currencies: Technical Strategies
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GBP/USD Developing Flag Pattern Heading Into ISM News from US
Wed, Feb 6 2008, 14:45 GMT
by Andrei Pehar
Update: Leaked ISM numbers have broken our upper trendline to the upside!
The Cable dropped since trading opened in London this morning, followed by a brief rally in response to PMI data out of the UK. Price is currently consolidating in a range between support at the S1 pivot point (1.9669) and resistance at the M2 median (1.9699). It is also being gradually pushed downward by its declining 50 simple moving average, forming a flag/pennant pattern. This is a Bearish pattern.
At the same time, there is a Bullish divergence forming between price and the MCAD histogram. The best way to play this situation would be to trade the range using stochastics, until a clear breakout occurs (perhaps inspired by ISM news due out of the US at 10:00 EST, or perhaps before). Once you have a clear breakout, then wait for a re-test (either support becomes resistance, or resistance becomes support) and look for trades in the direction of the break.
Published on Wed, Feb 6 2008, 14:47 GMT
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