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GBPUSD Testing Fibonacci – UK Economic Outlook


Sep.12.2016

GBPUSD Testing Fibonacci

Not only we've got a ton of hot data out of the UK this week, but also GBPUSD testing Fibonacci has reached inside the Ichimoku cloud. So we may get a make-or-break on our trading strategy as early as Tuesday. Read on for more Invest Divas (and Divos)!

GBPUSD Testing Fiboncci - Kiana Danial of Invest Diva with Orbex WebTV GBPUSD Testing Fiboncci - Kiana Danial of Invest Diva with Orbex WebTV

 

GBPUSD Testing Fibonacci | Technical Analysis

As I predicted in August GBP/USD seems to have bottomed out and formed a double bottom. The pair has now reached inside the  Ichimoku cloud and currently testing the 23% Fibonacci retracement which is also a double bottom neckline on the daily chart at 1.1330.

GBPUSD Testing Fibonacci 23% Level - Technical Analysis GBPUSD Testing Fibonacci 23% Level - Technical Analysis

We are waiting for a confirmation of a break above this level for further bullish moves, and this week we might get enough volatility for it. However as you may have noticed, our Ichimoku cloud is pretty thick and we have 3 layers of pivot before we can change our long-term outlook completely to bullish.

Our next resistance levels are set at the 38 and 50% Fibonacci levels at 1.3630 and 1.3850 respectively, while support remains at 1.2875.  

 

Hot Market Moving Events Coming Up...

UK Side

CPI - Tuesday

Coming up on the economic calendar on Tuesday  the UK will release their Consumer Price Index for August at 8:30 AM GMT. Another rise in price levels is expected for August. The headline CPI is projected to climb from 0.6% to 0.7% while the core CPI is expected to rise from 1.3% to 1.4%. If so, this would mark the third consecutive monthly gain in headline inflation, and therefore could push the GBP/USD pair higher.

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Jobs Figures - Wednesday

On Wednesday UK’s  Jobs figures will be out at 8:30 AM GMT.  This jobs release can be tricky to trade since it has three main components:

  1. The claimant count
  2. The average earnings index
  3. The unemployment rate.

Investing junkies are expecting an increase of 1.7K in the number of claimants for August, which would signal a drop in hiring for the month. The average earnings index for the three-month period ending in July could slide from 2.4% to 2.1%. The unemployment rate is expected to hold steady at 4.9%. 

Guess what would happen if all three components beat expectations?! You got it, the "GBPUSD Testing Fibonacci" could change to "GBPUSD broke above 23% Fibonacci and aiming towards our next resistance level."

Retail Sales, BOE Rate Decision - Thursday

We've got the hottest UK events for last this week, so if we fail to get enough kick out of Tuesday and Wednesday reports, Thursday's data should do the magic for us! While UK retail sales are expected to be 0.4% lower in August, the interest rates are expected to remain the same at 0.25%.

US Side

Besides election news, we are expecting tamer US market moving events during the week:

On Tuesday the US 30-y Bond Auction is scheduled for 5 PM GMT during the New York session.

On Wednesday US Crude Oil Inventories will be out at 2:30 PM GMT.

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Trading Strategy - GBPUSD Testing Fibonacci

Bullish Scenario: As GBPUSD reaches Ichimoku cloud, we could prepare for a long-term bullish trading strategy.

Keep in mind that depending on the strength of the current sentiment and upcoming economic data, the pair may not be able to break the pivot of 1.3350.

In that case, we could see another move back down towards 1.2875 so the pair can regain energy, form a triple bottom pattern and try out the neckline once again.

 

 

To develop a long-term strategy, first calculate your risk appetite as well as risk tolerance. Then you can decide whether to take the risk of entering a bullish entry now, or waiting to see if the pair breaks above the neckline.

For targets, again depending on your risk tolerance, you can go for any of the levels printed out in the table below.

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.

 

More on Economic Calendar

Tuesday

London Session: During the London session we have Euro-Zone ZEW Survey at 9 AM to make a medium-term forecast about Germany 's economic situation.

 

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Wednesday

London Session: At 9 AM Euro-Zone Industrial Production will be out to measure the volume change of output of the manufacturing and energy sector.

Next Day's Asian Session: We are expecting New Zealand’s Gross Domestic Product to be out during the next day’s Sydney session at 10:45 PM GMT.

 

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 1.3350 1.3850
1.3125 1.3630 1.4090

 

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 xoxo

Kiana 喜愛成
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