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GBPUSD trading idea on 12 May 2017

On Thursday, GBPUSD dropped sharply to one-week low after the Bank of England signaled no urgency to raise rates, despite an inflation overshoot above the central bank’s 2% target. There are no macroeconomic releases due from the UK today and hence, the releases of the American economic indicators affecting the U.S. dollar would remain an exclusive driver of the pair's move on the last trading day of the week, including U.S. April retail sales and CPI to be release at 07:30 A.M. (GMT-7).

Technically, on the H1 chart, GBPUSD remains under pressure after dropping sharply yesterday. But today, I expect this currency pair to have a rebounce in case it tests 1.28200. I suppose wave (c) is developing in an Impulse (IM) wave pattern. Once wave iii in (c) finishes, there will be a rally for wave iv in (c) toward 1.2905 that is Fibonacci Retracement 50.0% of wave iii.

Note that we still have one downside 5th wave of (c) to target 1.2800 in short term. And a strong break below there would provide confirmation and extend the declines.  

In general, I will enter a long position at 1.2820 or short position at 1.2905. A strong breakout above 1.2905 would be needed to signal that a bottom is formed.

By Jack Huyn

Please be informed that information I provide is for educational purposes only and not intended as investment advice. Information and analysis above are derived from utilising methods believed to be reliable, but I cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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