If you’re still looking for a pair to trade during the NFP release, then you should check out Cable’s range play!
As Big Pippin pointed out in today’s Chart Art, GBP/USD is having trouble breaking above the 1.3300 major psychological handle.
A quick look at my potential inflection points this week tells me that the level also lines up with not only the pair’s top weekly ATR but is also around last week’s highs. Talk about the stars lining up! What makes me extra confident about this technical setup is that there’s also a bearish divergence on the 4-hour time frame.
Unfortunately, the signs aren’t as clear on the fundamental front. See, the U.K. has been printing better-than-expected reports lately, which support claims that the economy is doing fine despite a Brexit vote. In addition, Forex Gump has told me that today’s NFP report will likely come in weak and throw water to the Fed’s rate hike rumors.
Because of conflicting signals from fundamental and technical analyses, I’m taking extra care before I place any orders. If the U.S. prints significantly positive jobs data today or if market players focus on the fact that much of the U.K.’s recent strong reports come from a weak Sterling, then I’ll likely put on a short trade with stops just above the major resistance levels. If the NFP report disappoints though, or if the pound continues to climb higher across the board, then I’ll look out for opportunities to place an upside breakout trade.
What do you think of this setup? Will the pound see losses against the dollar this week? Or will we see an upside break from a range that has been holding since early July?
As always, don’t be shy to let me know what you think!