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Daily Observations: July 23, 2013

Daily Observations: July 23, 2013

Christopher Vecchio, CFA, Senior Strategist

Pending Positions:

- Short GBPUSD at 1.5390, Stop at 1.5540, Target 1 at 1.5280, Target 2 at 1.5170, Target 3 at 1.5030

Typical Time Frame: 1-day to 1-week

I continue to wait on the GBPUSD to approach my sell level, and after 24-hours of monitoring it appears that the pair may fall just short of reaching the objective. Nevertheless, as I don't want to alter my game plan due to short-term price fluctuations, I maintain my bias and reasoning for the planned short.

From yesterday:

"The GBPUSD is rising fast but is heading into a conflux of resistance around 1.5400. The level is easily identifiable on the H4 and daily timeframes, with the 38.2% Fib yearly high/low and the 61.8% Fib June high to July low at 1.5390/400. With no truly major data due this week, there are a number of themes to watch that are likely to guide price action; and technical trading (not driven by commentary or headlines but rather by pure price action) is more likely in my opinion.

Fundamentally, British Pound strength may be short lived. From the onset, the intention of Bank of England Governor Mark Carney has been to clarify policy and be more transparent; the introduction of forward guidance was intended to help in the pursuit of this goal. And the goal is to let market participants know that UK interest rates will be kept lower for the foreseeable future. Yet the reaction seen in the Sterling says that ‘no additional easing’ from Carney equates to ‘tightening.’ The BoE will take note and recalibrate quickly, which should weaken the British Pound in due time."

Are you new to FX or curious about your trading IQ?

As always, any other trade ideas and general macroeconomic musings can be found in the DailyFX Real Time News feed, or by following me on Stocktwits/Twitter @CVecchioFX.

I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 06:00 EDT / 10:00 GMT, in which I delve deeper into my positions and thought processes behind my analyses.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.