GBP/USD’s Solid Trend Lines Presents Scalping Opportunity
The recent minutes from the BoE and comments from MPC members expressed the uncertainty that surrounds the U.K. economy and future monetary policy. Therefore, it is understandable if markets remain conviction less when trading the GBP/USD. The pair has been in an tight ascending channel for over a month providing a level of predictability that scalpers desire. Dovish BoE minutes weighed the pair yesterday to only have a strong retail sales report provide support today. Upcoming GDP could generate volatility but with the lack of conviction, the pair’s trend lines offer potential points of inflection.
Key Technical Levels
The 20-Day SMA at 1.5170 has been a key support level and has come to define the lower bound of the channel. The channel trend lines are currently placing support and resistance at 1.5150 and 1.5600 respectively. A descending short-term trend line is providing target levels for entering and exiting positions, but based on the broader pattern a break above is expected which could provide a short-term spike to profit from.
The GBP/USD’s Bollinger band has its ascending channel has started to flatten. At 487 pips the pair’s level of variance is at the bottom of the most traded pairs. Daily volatility has also quieted with the ATR declining to 172 pips and accounting for only 1.06% of the spot price. On a side note implied volatility readings for Yen crosses are higher as the BoJ has resumed intervention talk.
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