Check out my previous G/U deep dive from mid-July here to see how we have progressed...
Looking at G/U's long term view, we can see the key horizontal level 1.43 which has been a major support back in 2011 and now major resistance from 2018 onwards. We did see price approach this zone in July/August and it's looking like we could see another move back towards the support in the long-term range-bound market to 1.21.
Following the break of the ascending channel, we're seeing another range-bound market in the medium-term between 1.36 and 1.39. The order block on the chart above is formed from the Daily timeframe.
Price did break the range, breaking past support at 1.36 and finding new lows at around 1.34. Currently, we can see price has now retraced the move and is already possibly finding resistance at the old bullish order block, now new breaker block. I personally believe though that this breaker block will fail, as it's at the same level as retailers support, who are now looking for confirmations of a new resistance. Just above we can see the new H8 bearish order block, where I believe it's likely we could see price reverse there.
As expected, 67% of G/U traders are waiting for price to reverse now, as price is now showing rejection to the resistance level. We're seeing more than double the amount of lots in volume, meaning financial institutions could make a lot more money stopping out the early bears.
Over the next couple of weeks, we've not actually got a lot of major GBP news, however...
We've got many major USD news coming out. This means that the price of G/U over the next couple of weeks will be more dependant on what happens to the USD, rather than GBP. A stronger Dollar will cause the price of G/U to decrease in price and a weak dollar will cause price to increase.
The rising price of G/U is caused by the easing of the fuel crisis in the UK after the government announced that armed forces will begin delivering petrol across the country. Adding to this, UK Prime Minister Boris Johnson said that we have reliable supply chains for Christmas. We also have a more hawkish turn by the Bank of England last week, indicating that they're heading towards policy tightening next year. An upward revision of the UK Services PMI for September was finalised at 55.4 against the 54.6 flash estimate, further strength for the Pound.
USD strength is rising as the Fed is expected to begin tapering its bond purchases as soon as November. Markets have started pricing the possibility of an interest rate hike in 2022. The USD will play a key role in influencing the pair amid absent news events from the UK. The price of G/U will mostly depend on what's currently going on in America as there's way more events coming out from there.
Save time looking for setups with the EdgeFinder's watchlist! In a glance, see the EdgeFinder's current top buys and top sells.
The dollar flew higher last week as a result of resilient economic news along with a higher PCE than expected. Now the DXY has reached a decision point in price action. This week's NFP will help determine the sentiment around the potential June rate hike. Here is what we are looking at: EdgeFinder Analysis USDCAD […]
Considerably dovish news from central banks in the US and New Zealand has caused a major stir in the markets. Governor Orr and Vice Chairman Powell both released some reassuring news for the economy in the long term. But what does this mean for USD and NZD? EdgeFinder Analysis GBPNZD is a pair that should […]
As we trade into a broad news week covering the economic status of multiple countries, there are several scenarios we should consider. Although it is impossible to predict the future, we can at least prepare for the news events set to come this week for kiwi, dollar and the pound. EdgeFinder Analysis GBPJPY still maintains […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here