GBP/USD: Waiting for a Trend Line Break

Trade Idea: 2012-2-16 2:02

GBP/USD 15-Minute Chart

The dollar has been on a rally hasn’t it? However, I have a few reasons up my sleeve to think that it’s about to end soon. For one, I believe that the downward move on GBP/USD is already overdone.

On the 15-minute chart we see that the pair has been slowly making lower highs. However, I think it’s noteworthy to point out that it has failed to make a new low. This leads me to think that the rally could be over soon.

I won’t be too hasty in pulling the trigger though. I will wait for GBP/USD to break the resistance at the falling trend line. So, I’ll look to buy GBP/USD around 1.5700.

On the fundamental side of things, we just saw the FOMC meeting minutes reveal that the Fed was pretty open to quantitative if the U.S. economy were to become worse. While it has not happened yet, I think that traders could start pricing in their expectations already. Remember, quantitative easing is usually considered bearish for a currency.

In the U.K., we’ve been seeing a couple of good reports. Their consumer price index, for instance, continued to taper down. The last report came in at 3.6%, down from its high at 5.2%. Additionally, the manufacturing PMI, Halifax HPI, Manufacturing Production, and Trade Balance ALL beat consensus.

So, based on both my fundamental and technical analysis, I think the pair is going to head higher soon and break the falling trend line. Hopefully, I got it right.

XOXO,

Huck

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  • huck

    Can’t believe I missed the entry on this one… I wasn’t in front of my screen when the breakout happened!

    • SwordOFManagement

      Missing a move is more painful than losing money, I know!

      Here is what the latest version of TS, the “Price Purifier”, was showing: http://i42.tinypic.com/15zm6b9

      As you can see, it is really helpful in pointing out trends as well as long term levels of S/R.

      You can get the indicator from the last post in the thread.

      My best wishes are always with you Huck, go get’em!

  • Forexnoob

    i’m with you on this one huck..

    • huck

      Thank you :)

  • giancarlo

    You have correctly anticipated the move. Thanks for sharing.

    • huck

       Your welcome, giancarlo.

  • LearningFast

    I have to disagree here, the GU has been making lower lows on the 1hr and has been lower lows and lower highs since the 9th of feb. it’s stuck in a range since mid yesterday but I’m sticking my neck on the line to say it’s going to pull up to around 57/5710 before falling again, it’s in a down trend. Zoom out and look at the larger time frame.

    • LearningFast

      Further more if you look at EU as correlation it’s doing exactly the same thing

  • Forexachievers

    The pair did go up. Well done Huck.

    • huck

       Thanks.