GBP/USD Range Offers Potential Scalping Opportunity
In the current environment it is best for scalpers to sit on the sidelines as the risks for a high frequency strategy are elevated. The GBP/USD has been relatively quiet compared to yen crosses and commodity dollar pairs. The sterling along with the Euro were the first two currencies to feel the impact of the European debt crisis which has now spread throughout the global economy. Therefore, we could see the pair continue to consolidate until another catalyst emerges.
Key Technical Levels
A long-term bearish trend line could be the source of current support and may limit downside potential for the GBP/USD. Meanwhile, a short-term range is developing with 1.4250 holding firm as the lower bound providing an ideal target level. A break below could negate the current formation and lead to a continuation of the bearish trend. The upper bound of the range is being defined by 1.4500 and if support holds today a re-test is possible.
The GBP/USD has been in an extended bearish trend which has seen its Bollinger band width widen to 1507 pips, but we have started to see the pace of decline slow. Regardless, the high level of variation and volatility is a concern for high frequency traders. Indeed, the pair’s ATR of 235 pips puts it near the top of most traded and is a major red flag for scalpers. We have also seen one week implied volatility readings continue to rise as the broader flight to safety continues.
To Discuss Scalping Strategies and Get Tips From Other Traders Visit The Scalping Forum.
To discuss this report or be added to the email list, contact John Rivera, Currency Analyst: email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.