GBPUSD Intraday Market Analysis: Configuring the 60 Minutes Trend

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GBPUSD Technical Analysis

GBPUSD, similar to all USD pairs and crosses in the Forex market was heavily sold as the Non Farm Payrolls (NFP) was released on Friday at 12:30 GMT.  The US Dollar enjoyed moderate gains as the NFP prior figure was positively revised. The gains quickly evaporated as the market digested the current figure that led to a swift, healthy correction towards the London close.

Our GBPUSD intraday strategy is based on the hourly (60 minutes) chart.

GBPUSD 60 Minutes Chart

Please click on the chart to enlarge:

GBPUSD 60min Chart 08/08/15

GBPUSD 60min Chart 08/08/15

GBPUSD Trading Strategy

 Despite the fact the lower support line (in black) was violated by the market as the NFP was released we are classifying the bearish breakout as a false breakout that does not invalidate the firmness of the support level. If you pay close attention to the GBPUSD chart you would notice the strong potential for reversed Head-And-Shoulders (H&S).  The left-hand shoulder is already in the place where the NFP candlestick acts as the head of the reversal pattern. In order for the reversal to be confirmed, the price must re-test 1.5536 and fail to close above at the hourly close. In such a scenario a short intraday entry may present itself where we suggest re-affirming the quality of the technical signal on the 30min and 15min chart.

Following a successful re-test of 1.5536, the price must then dip towards 1.5497 and post a successful re-test, which would then provide a neat long entry to GBPUSD. The natural target would be the neckline (1.5536) where a break above would expose the upper resistance line (in black). Due to the positive divergence in the Relative Strength Index (RSI) we believe a break above 1.5536 without a retesting 1.5497 may still sustain the uptrend in GBPUSD, targeting the upper resistance line. With that said, the possibility for corrective weakness off 1.5536 (if it is tested by the market) is greater than a clean break above without painting the right-hand shoulder of the reversal pattern.

Should 1.5497 hold and GBPUSD will be unable to break above, the lower support line (in black) may provide a swift intraday entry. Should a re-test take place as described it is very likely the hourly chart will have large, lower shadow. It is essential to wait for the hourly close to confirm a successful re-test has taken place rather than seeking a 15min or a 30min entry as we presented earlier for a re-test of 1.5536. Should the hourly chart close below the lower support line (in black) GBPUSD intraday strategy would be negated.

10/08/15 UPDATE: GBPUSD provided a clean breakout entry we outlined in the trading strategy for the currency pair.

GBPUSD 60min Chart

Please click on the chart to enlarge:

GBPUSD 60min chart 10 August 2015

GBPUSD 60min chart 10 August 2015

All our targets were met as we have anticipated.

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