Ichimoku Clouds over GBPUSD – Forex Trading Strategies

Ichimoku Clouds over GBPUSD

A dark, massive Ichimoku clouds over GBPUSD as we enter the final trading week of September. What’s next for the pair and how could coming risk events impact our strategy?  Read on for Invest Diva‘s IDDA approach to strategy development.

Ichimoku clouds over GBPUSD – Kiana Danial with Capital Index

Ichimoku Clouds over GBPUSD | Technical Analysis

We have passed two weeks of incredible volatility and firework event risk. GBP/USD erased all the previous corrections on Friday and dived back to the post-Brexit referendum level at 1.29, forming a strong bearish engulfing candlestick pattern. With that, we might see yet another test of 1.2875 support level this week.

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As the thickening Ichimoku clouds over GBPUSD acting as a massive resistance, the all time low of 1.28 becomes stronger of a support. The pair now has a very narrow range between this support and resistance. And a break below 1.28 could now be more catastrophic than ever because it could open doors to serious downfalls towards 1.25.

Ichimoku Cloud Over GBPUSD – Technical Analysis

Alternatively, a breakthrough the Ichimoku cloud could indicate a long-term consolidation until the Brits figure out their Brexit details. Pivot/ resistance levels are set at Fibonacci retracement levels at 1.3345, 1.3630, and 1.3850 respectively. Long term resistance is set above Ichimoku at 1.4090.

Hot Market Moving Events Coming Up…

Coming up in the economic calendar today during the London session we have German Ifo Business Climate at 8 AM GMT which is one of the country’s key business sentiment surveys.

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 The US will release their New Home Sales (AUG) during the New York session at 2 PM. Also pay attention to speeches from ECB and FOMC members later during the New York session which could create volatility in the EUR/USD pair.

Market Sentiment – Ichimoku Clouds over GBPUSD

On Monday’s Sydney market open the GBP/USD market sentiment was pretty bearish as 79% of traders were long on the pair. Using this as a contrarian indicator, we could expect further drops towards 1.2870 this week.

Trading Strategy – Ichimoku Clouds over GBPUSD

Putting the technical, fundamental and sentimental points of the IDDA approach together, we have the below two scenarios for GBP/USD.

Bullish Scenario:

In my piece two weeks ago, I predicted that the pair could move back towards 1.2875. Guess what is happening this week?

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As GBPUSD reaches Ichimoku cloud, we could prepare for a long-term range trading strategy. Pivot targets are stated below.

One strategy is to buy at the bottom at 1.2875 and aim for the Fibonacci retracement levels depending on your risk tolerance.

Bearish Scenario: On worse than expected UK data or better than expected US data we could see the pair moving back to the all time low of 1.2875. Short term bears can take advantage of this move on market news.

However as mentioned above, for a long-term bearish scenario we need a pretty damn strong confirmation of a break below 1.28.

Stay tuned for market updates and signals on that my fellow invest divas.

Here are Invest Diva’s calculations for important GBP/USD  approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
1.2875 1.3345 1.3850
1.26 1.3630 1.4090

 xoxo

Kiana 喜愛成
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