Today’s Trading Edge: GBP/USD – UK Data Triggers Pound Selling

WWM GBPUSD FEB 19 2014

U.K. firms slow hiring and a surprise climb in the unemployment rate initially drove the pound 80 pips lower to 1.6636 before paring losses back to the 1.6720 area.  This release probably pushed back some forecasts on when the BOE will begin tightening.

Eyes on Minutes

With the FOMC minutes to be released at 2pm EST, traders are waiting to see if they see a sign of reduced optimism by the Fed.  Recent data leading up to Federal Reserve’s unanimous decision has weakened and any signs of potential dissention may help slow down the pace of tapering this year.

Bearish Drivers119

Earlier this week, price formed a bearish butterfly pattern that may help signal a move to target the 50-Day SMA and near-term support currently at the 1.6450 level.  If we see a break below that key area, bearish momentum may target the psychological 1.6300 level.  Key upside resistance remains around the well-tested 1.6750 area.  The next key upside target resides at the 1.7000 level, which represents the top spike that occurred in August 2009.

The trade: Sell GBP/USD at 1.6720 with a stop loss at 1.6770 and a take profit at 1.6470.  The Risk/Reward Ratio is 1:5.

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

Edward J. Moya is the Chief Market Strategist for edmoya.com, an educational website for foreign exchange and commodity traders. He has over 15 years of investment industry experience in forex, stocks, options and futures. At edmoya.com, Mr. Moya writes daily currency and commodity analysis and has authored numerous articles on trading using both technical and fundamental analysis for major financial publications. He is a contributor of technical and fundamental analysis in currencies and commodities to SFO, Market News International, and Forex Factory.

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