Matt Simpson, CFTe, MSTA
CityIndex
UP NEXT:
GBP: Preliminary GDP is the headline figure to finish the week off. Expected to soften slightly from last release any upside here should support Cable which appears to be building a base above 1.60. Any significant shortfall should see Cable break below 1.60 and deeper within the 300 pip range seen these past 6 session. Technical notes below.
USD: New Home sales have been rising gradually since the 2011 multi-year lows but expected to soften today. This leaves upside risk for USD if new homes come in above expectations. (Not pictured) Last month saw 504k new homes added (+18% m/m) but today's consensus is around 473k, so whilst a positive number would be a slower rate of growth.
TECHNICAL ANALYSIS:
GBPUSD: Awaiting GDP
The analysis may seem overly-simplistic today, but I really do see it this way. Strong growth = bullish Cable and to target resistance levels, Soft growth = weak cable.
If we remain around current prices near the release then it may be better to enter before the release with a wide stop (to reduce any nasty surprises from whipsaws or gaps) and aim for a lower reward/risk ratio.
Alternatively wait until the commotion has dies down and seek positions on lower timeframes, running the risk of missing the move all together as this is tonight's headline data.
EURUSD: Building base above 1.262
Looking back at yesterday's analysis it started out well with a snap back up to 1.262. Then... nothing. It didn't see the expected downswing and instead decided to oscillate within the previous hours range.
We do run the risk of limp price action tonight too. However if we do see a sustainable move then my bias today is to the upside as the lower test to 1.2622 support was the dominant candle in terms of volatility, to suggest buying down at these levels.
USDJPY: Run of the mill trend trade
The whole idea is to remain above the daily pivot and continue the bullish trend. A break below could see a retest of 107.49 and is a level I would expect to hold for the session. If we get particularly string housing data tonight then we may break above the weekly highs but I would prefer to stay nimble and just aim for the highs for a bullish setup to finish the week off.
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