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GBP/USD Above Ichimoku Cloud Ahead of Super Thursday


Feb.01.2017

It's been a tricky few days and we've got more to shake up the forex dance floor. With Super Thursday ahead of us, GBP/USD in particular has taken an interesting direction. So without further ado, let take the IDDA approach develop a GBPUSD Super Thursday trading strategy.

 

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1- Fundamental Points

UK side: The UK parliament voted in favor of starting the Brexit process.

US side: While the Trump administration continues to surprise the world on almost a daily basis, the Fed kept rates unchanged at 0.75% as expected on Wednesday. They did leave the door open for future hikes. As expected.

We had mostly better than expected data out of the US otherwise, which lead into a short-lived bullish momentum ahead of Super Thursday.

 

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Coming up... 

GBPUSD Super Thursday: We are now looking to today’s data for further direction, as it is labeled Super Thursday due to the magnitude of risk events out of the UK.

First we have UK Construction PMI released at 9:30 AM GMT, followed by Bank of England Rate Decision and Inflation Report at 12 PM. ECB's Mario Draghi Speaks at 12:15 PM and shortly after BOE Gov Carney will take stage to speak at 12:30, so the trading crowd could be up for a roller coaster ride during the London session. From the US their Initial Jobless Claims will be out at 1:30 to conclude the volatility on GBPUSD Super Thursday.

 

Not-so-super Friday: On Friday During the London session we are looking for PMI numbers to be released from Italy, France, Germany, the UK and the EU between 8:45 to 9:30 AM GMT.

The US will then release the Changes in Non-farm Payrolls for January at 1:30 PM GMT. US Unemployment Rate will also be out at the same time, expected to have remained the same at 4.7%.  Finally the ISM Non-Manufacturing PMI will be out at 3 PM GMT to end the trading week. With all this, still the main catalyst for USD could be the directions the new US government takes on the international landscape. 

 

 

2- Technical Points

On Wednesday's news, the GBP/USD pair went on a solid bullish move, approaching a key resistance level of 1.2760, while being supported by the daily Ichimoku cloud.

 

GBPUSD Super Thursday - Daily Chart Technical Analysis GBPUSD Super Thursday - Daily Chart Technical Analysis

 

 

1.2760 is important for many reasons: not only it is the neckline of the apparent new Double Bottom chart pattern, but it is also the 23% Fibonacci retracement level on the post-Brexit downtrend. With any luck, Super Thursday could be the make-or-break of this level, giving us fresh insights on the direction of the pair in February.

 

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3- Market Sentiment

Only 46% of traders are long GBPUSD ahead of Super Thursday on one the largest forex brokers in the US. Short positions are 3.4% below levels seen last week. While this is on the neutral side, we use this observation as a contrarian indicator to price action, since often time the trading crowd is wrong! So the fact that the majority of traders were short at the time of writing, gives signal that the GBPUSD Super Thursday may continue higher. Stay tuned for more on market sentiment for GBPUSD trading in our investing group.

 

GBPUSD Super Thursday Trading Strategy

Trading such high-risk event is generally not advised. Calculate your risk tolerance and use the levels mentioned below to create a strategy suitable for you once the market has calmed down after data release. For further help, please visit our investing group.

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

 

Support Levels Turning Point Resistance Levels
1.2115 1.25 1.3170
1.15 1.2760 1.3480

 

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GBPUSD super Thursday - Kiana Danial Invest Diva reports GBPUSD super Thursday - Kiana Danial Invest Diva reports

 

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