Scalping GBPUSD Correction- Long Scalps in Play Ahead of BoE, NFP
- Breach above weekly opening range high puts long scalps in play
- Outside day reversal candle suggests exhaustion low
- Key Event Risk on Tap
Chart Created Using FXCM Marketscope 2.0
- GBPUSD rebounds off 2015 LDC (low-day close) – 1.4989
- Outside day reversal candle off key support- constructive
- Resistance at median-line extending off Dec low & former 2009 TL support
- Break targets resistance objective at 1.5321, 1.5383 & 1.5479
- Constructive while within ascending pitchfork
- Support break targets 1.4950, 1.4812 & 1.4679
- Daily RSI divergence into the lows / resistance trigger-trigger break- bullish
- Former Sept momentum support trigger now pending as resistance
- Event Risk Ahead: ADP & ISM Wednesday & NFPs, Unemployment Rate on Friday
Notes:The sterling has made an impressive outside day reversal off the yearly low-day close (LDC) with the rally breaching above the weekly opening range high. The break shifts the scalp focus to the topside while above the 1.51-handle with only a break below pitchfork support invalidating our near-term directional bias.
Bottom line: looking to buy pullbacks / resistance triggers in momentum while above the Sunday high with a breach above the January median-line opening up subsequent resistance targets into 1.5260/70 & 1.5320. A quarter of the daily average true range yields profit targets of 28-31 pips per scalp. Caution is warranted heading into key event risk this week with the BoE Interest Rate Decision and the highly anticipated US Non-farm payroll report likely to fuel added volatility in USD and sterling crosses.
* 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.
Relevant Data Releases
Other Setups in Play:
- Scalping USDJPY Opening Range Ahead of NFPs- Shorts Favored Sub-118
- Scalping EURAUD Breakout- Longs Favored Above 1.44
- GBPAUD Weekly Opening Range Setup- Long Scalps at Risk Sub-1.92
- Scalping the AUDCAD Reversal- Shorts Favored Below 9928
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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