While I’m still waiting for my USD/CHF short trade to materialize, I found another interesting setup. What do you think of buying Cable seeing an uptrend soon?
See, GBP/USD is about to pop out a doji on the weekly chart. And while that’s interesting enough, it’s also fun to note that it’s doing so near the 1.3200 – 1.3300 area that lines up with a 38.2% Fib retracement, the 100 SMA, and a previous retest of a broken trend line. The sweet cherry on top is an oversold stochastic signal.
Will these lead to pound strength? It’s possible. For starters, Theresa May just won a crucial vote earlier this week so that MPs have much less power to send the government back to the drawing board if they don’t like the final withdrawal agreement.
And then there’s a surprise hawk from the Bank of England (BOE). See, BOE Chief Economist Andy Haldane joined the hawks team (no, not Atlanta’s NBA bet) with Ian McCafferty and Michael Saunders in voting for a rate hike in June.In addition to that, the Monetary Policy Committee (MPC) also shared that it might start reducing its stock of purchased assets when the Bank Rate hits 1.5% and not 2.0% as it previously stated. Woot!
On the other side of the trade, the dollar is having trouble extending its post-FOMC gains thanks to trade war concerns.
With no compromise in sight yet, the U.S. and China might very well go ahead with their tariff plans starting with ones that will go live on July 6.
Of course, it also doesn’t help that the U.S. Dollar Index is in a pretty sweet spot for the long-term bears.
In any case, I’m gonna be on a wait-and-see mode until the pound gets a bit of momentum. After all, GBP/USD could get comfortable around the level and stay there for a few more weekly candles, or it could test the 100 SMA some more before seeing bullish pressure.
How about you? Do you think the pound will extend its uptrend from late 2017? Or will the dollar continue to dominate and send the pound to new 2018 lows?
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