The GBPUSD is in the process of establishing a base or a consolidation from which hopefully a new upside leg can emerge. As long as we’re trading above 1.2228 and more importantly above 1.2200 we still favor the bullish case, however a break below these levels will threaten 1.2020 the new multi decade swing low. The first month of the year is always important for the direction of the trend however we still have to wait for a clear breakout on either side before making a strong case for a bullish or bearish trend.
The stochastic indicator is also in the process of resetting and we can read a build up in bullish momentum as well. For further confirmation we’ll need a break of the previous week high 1.2432, but more importantly the big psychological number 1.2500 is the line in the sand.
The UK economic calendar looks mild as no major risk event is scheduled on the docket. The only notable new event is the Manufacturing Production figures which are scheduled to be released on Wednesday and based on the market consensus we should expect positive figures, up from -0.9% to 0.6% which, at least in theory should be bullish for GBPUSD.
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