GBPUSD: Forex Technical Analysis – Positive data support British Pound

By IFCMarkets

Positive data support British Pound

Manufacturing activity expanded faster than expected in October. Will the GBPUSD resume strengthening?

UK manufacturing activity expanded in October: Markit’s manufacturing purchasing managers’ index rose to 56.3 in October, from an upwardly revised 56.0 in September. And Nationwide house price index annual growth edged up to a three month high in October despite diminished prospect after Brexit. Against the background of accelerating economy recent positive data raise chances the Bank of England will opt to hike rates today.

On the daily chart the GBPUSD: D1 has breached above the 50-day moving average MA(50).

• The Parabolic indicator has formed a buy signal.
• The Donchian channel is neutral, it is flat.
• The MACD indicator is below the signal line and the gap is narrowing, which is a bullish signal.
• The stochastic oscillator has breached into the overbought zone, this is a bearish signal.

We believe the bullish movement will continue after the price breaches above the upper Donchian boundary at 1.3320. A price above that level can be used as an entry point for a pending order to buy. The stop loss can be placed below the fractal low at 1.3069. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.3069) without reaching the order (1.3320) we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Market Analysis provided by IFCMarkets