Intraday Market Analysis: GBPUSD Expected Trend in the Market

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GBPUSD Intraday Strategy

GBPUSD suffered from heavy losses following the bearish pressure on EURUSD, which lead to a significant demand for the US Dollar. We have noted GBPUSD has reached its daily resistance but received the impression the weakness may be limited to GBP, which is why we used to concrete out entry to EURGBP.

Although we tend to use to 4hr chart for our intraday trading strategies we would also like to display the daily chat in addition to the 4hr chart.

GBPUSD Daily Chart

Please click on the chart to enlarge:

GBPUSD Daily Chart 25/10/15

GBPUSD Daily Chart 25/10/15

We noted the upper resistance contained  GBPUSD uptrend despite the prior false breakout on 24 August, 2015. The price then broke below 1.5342, which lead to further weakness in the currency pair. The price still has some distance from the its next support as seen in the above chart. We turn to the 4hr chart to further analyse GBPUSD.

GBPUSD 4hr Chart

Please click on the chart to enlarge:

GBPUSD 4hr Chart 25/10/15

GBPUSD 4hr Chart 25/10/15

GBPUSD weakness appeared to have been triggered by a mutated form of top Head-And-Shoulders (H&S) where the 100% objective of the reversal lies at 1.5215. However, GBPUSD is within a close proximity to what appears to be a strong support level (in black). We have also noted the price is painting higher highs and higher lows since October 2015, which is a distinctive sign of an established uptrend despite the recent weakness.

If the nearest support is successfully tested on the 4hr chart that may yield to corrective gains,however, the top H&S may limit the bullish retracement to 1.5342 before a resumption of the downtrend. If the price is able to firmly break above 1.5342 the next resistance (1.5380) may be targeted by the market where failure to break above may force a moderate, bearish retracement in the currency pair. A break above 1.5380 is insufficient as the price may require to take out 1.5410 in order to negate the top H&S reversal.

If it wasn’t for the top H&S and the nearest support level (in black) will be successfully tested by the market we would expect GBPUSD to break above 1.5500 as part of the established uptrend as seen in the 4hr chart.

If the price breaks below the nearest support (in black) we would prefer a re-test of the breached support line (which acts as a resistance in such a scenario) in order to minimize the possibility for a false breakout. A bearish breakout would then suggest further weakness is due for GBPUSD (that were initiated by the top H&S), targeting 1.5215, which is the 100% objective of the top H&S. A break below 1.5215 may suggest the weakness has yet to bottom for GBPUSD, targeting the lower support line (in black, approximately 1.5555).

The Prelim Gross Domestic Product (GDP) that is scheduled for release on Tuesday (27 October, 2015) may be the trigger for our GBPUSD intraday strategy.

26/10/15 UPDATE: GBPUSD missed the lower support line (in black) by several pips before retracing higher. The gains were capped by 1.5380 as we outlined in the intraday strategy for the pair.

Please click on the chart to enlarge:

GBPUSD 4hr Chart 26/10/15

GBPUSD 4hr Chart 26/10/15

If the 4hr candlestick closes with a long upper shadow please note the price may re-test 1.5380 although such a retracement is not guaranteed.

27/10/15 UPDATE: 1.5380 was the key level as we wrote in our intraday strategy for the pair and the recent weakness is part of the top H&S reversal pattern we discussed.

Please click on the chart to enlarge:

GBPUSD 4hr Chart 27/10/15

GBPUSD 4hr Chart 27/10/15

GBPUSD may re-test the breached support (in black) before resuming its downtrend in the market.

28/10/15 UPDATE: GBPUSD re-tested the breached support (in black) and resumed the downtrend as expected.

Please click on the chart to enlarge:

GBPUSD 4hr Chart 28/10/15

GBPUSD 4hr Chart 28/10/15

Please note an additional re-test of 1.5280 is possible. There is a fair possibility of GBPUSD missing 1.5215. We hope the target will be met by the daily close.

Intraday Market Analysis: GBPUSD Expected Trend in the Market
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Intraday Market Analysis: GBPUSD Expected Trend in the Market

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Intraday Market Analysis: GBPUSD Expected Trend in the Market

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Intraday Market Analysis: GBPUSD Expected Trend in the Market

Last Updated on October 29, 2015