Think the dollar is in for more losses? If you do, then this potential forex breakout is for you. Check it out!
One look at Cable’s chart shows us that the pair is on the edge of a possible breakout. You see, GBP/USD is currently struggling at the 1.5250 area, which is right around a rising channel resistance on the 1-hour time frame. And if that’s not enough to get your bull horns tingling, then I should also point out that the 100 SMA looks like it’s about to cross above the 200 SMA.
Fundamentally I’m also comfortable with a short-term long pound trade against the dollar. After all, the Greenback is currently being weighed down by overall risk appetite, rising commodity prices, and Uncle Sam’s weak NFP, ISM services PMI, and trade deficit data supporting a delayed rate hike from the Fed.
Over the next couple of hours we’ll see the U.K.’s monthly manufacturing production (expected to print higher than last month’s figure) and the NIESR GDP estimates. I think these reports, as well as positioning ahead of potentially bearish FOMC members’ speeches, could be enough to push Cable higher.
I’m looking at the 1.5350 (100 pips away) as possible resistance in case price does break above the pattern. The level is right around the 50% and 38.2% Fibs and a previous area of interest.
Is the pair headed higher or should I wait for action around the 1.5350 handle before I enter a short trade? What do you think?