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GBPUSD at Risk Heading into BoE, NFPs- Key Resistance 1.6754

By , Currency Strategist
05 March 2014 19:29 GMT

Talking Points

  • GBPUSD targets critical resistance range- 1.6722/54- Major Inflection Point
  • Focus is on March/weekly opening range- break to validate scalp bias
  • Major event risk on tap from BoE tomorrow & US labor report (NFPs) on Friday

GBPUSD Daily Chart

Forex_GBPUSD_at_Risk_Heading_into_BoE_NFPs-_Key_Resistance_1.6754_body_GBPUSD_DAILY.png, GBPUSD at Risk Heading into BoE, NFPs- Key Resistance 1.6754

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPUSD holding within ascending channel formation off the Nov base
  • Key daily resistance 1.6722/54- Long bias at risk below this level
  • Breach targets objectives at 1.6877/90, 1.7040/65
  • Interim daily support 1.66- Break targets larger correction off Feb high
  • Support 1.6536, 1.6441/69- Broader trend constructive above 1.6252
  • Daily RSI resistance trigger pending
  • Key Events Ahead: BoE Rate Decisiontomorrow and US labor report on Friday

GBPUSD Scalp Chart

Forex_GBPUSD_at_Risk_Heading_into_BoE_NFPs-_Key_Resistance_1.6754_body_GBPUSD_SCALP.png, GBPUSD at Risk Heading into BoE, NFPs- Key Resistance 1.6754

Notes: We noted last month that the “1.6722/54 represents a significant region of resistance and is defined by multiple longer-term key Fibonacci levels and the 2011 high. The pair has continued to respect this barrier on a close basis with the high close coming in exactly at 1.6742. We’ll be looking for the weekly/monthly opening ranges to form below this threshold with a break of said range likely to offer further guidance on a near-term bias heading into March trade.”

The pair has continued to respect this region since the start of March trade with a clean weekly opening range now in view. Our immediate focus is against the 1.6754/58 resistance level which comes in just above the weekly high with a move/close below the 1.6653/58 support structure shifting our bias to the short side. Such a scenario would suggest that a more significant correction off the February high is under way. That said, it’s important to note that the broader trend remains weighted to the topside and a breach/close above 1.6758 puts long-side right back into play.

Bottom line: Cable seems to be in consolidation below key resistance and we’ll look for a decisive break of weekly opening range to further validate on our immediate scalp bias. Stay nimble heading into key event risk over the next 48 hours with the ECB / BoE interest rate decisions and the highly anticipated non-farm payroll labor report on tap. The prints are likely to fuel added volatility and could serve as a catalyst for validation of the initial opening ranges. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Bearish Invalidation

Daily / 30min

1.6754/58

61.8% & 100% Ext(s) / Wkly ORH / 2011 High (1.6745)

Break Target 1

30min

1.6794 – 1.6800

88.6% Retrace / 38.2% Ext

Break Target 2

Daily / 30min

1.6822/25

2014 High / 100% Ext

Break Target 3

30min

1.6848

161.8% Extension

Break Target 4

Daily / 30min

1.6877/90

Nov 09 High / 78.6% Ext

Break Target 5

Daily

1.7040/65

09 High / 100% Ext

Support Target 1

30min

1.6700

Soft Support / Pivot

Support Target 2

30min

1.6653/58

61.8% Retrace / 50% Ext / Wkly ORL (1.6640)

Bullish Invalidation

30min

1.6620/22

78.6% Retracement / 61.8% Ext

Break Target 1

30min

1.6582

Last Week’s Low / Soft Support

Break Target 2

Daily / 30min

1.6529/36

50% Retracement / 100% Ext

Break Target 3

30min

1.6500

Soft Support / Psychological Barrier

Break Target 4

Daily / 30min

1.6470

61.8% Retracement

Average True Range

Daily (20)

96

Profit Targets 22-24pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars on Thursday morning this week on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)

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05 March 2014 19:29 GMT