Okay, some of you may think I’m crazy, but I’m going to look for a short in GBP/USD. In the current US Dollar bearish environment, it’s probably wise to continue to short the Greenback, but GBP/USD has moved up almost 400 pips from the last retracement and it may be in overbought territory at the moment. We’ve seen US data show reasons why the US economy is slowing all last week, but I think traders are looking for some positive US data or any reason to close their Greenback shorts to take some profits.
Tomorrow we have the ADP Non-Farm Payroll report released at 8:15 am EST. The ADP report was pretty close to the government’s number in September, so I think traders will watch closely and react. At 10:00 am EST, the ISM Manufacturing Index number will be released with consensus expectations at 53.0. Of course, with all of the negative US data in the past weeks we may see a weaker than expected number, but if this number comes out at expectations or higher, we should see our trade triggered. Here we go:
Short GBP/USD @ 1.9030, stop @ 1.9050, pt1 @ 1.9010, pt2 @ 1.8990