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GBPUSD: Rising Wedge

In the beginning of the month the comments of Bank of England (BoE) suggested that a rate hike is closer than to extend the facility program, but there is much that can happen between now and the end of the year that can overturn the currency’s recovery.

Today on the economic agenda from the U.K we have the Consumer Price Index in January that is expected to fall from 0.5% to 0.3% showing that inflation in the UK is still falling. In the US we will have from the Net Long-Term TIC flows in December that is estimated to rise from 33.5B to 41.3B.

On yesterday session the GBPUSD initially rose but found enough selling pressure on the top of the rising wedge to turn things around and close near the low of the day. The pair is in a recovery phase, trading above the 10 and 50 day moving average. Stochastic in showing a overbought market, so we may expect a resumption of the downward trend.

Expecting downward move to 1.5237 (scenario 1) or even to a key level at 1.5088 (scenario 2) on a break below previous day low at 1.5338.