GBPUSD: Compelling Sell Entry Setup Seen
GBPUSD put in a Bearish Engulfing candlestick pattern below resistance in the 1.5778-1.5905 region, stalling above the 14.6% Fibonacci retracement at 1.5654. The setup is generally compelling as a short entry opportunity, with an entry above 1.5785, a soft target at 1.5654 and a stop-loss on a daily close above the October 14 high at 1.5851. However, we are already holding a considerable short EURUSD position and since both pairs are closely correlated to the S&P 500, adding a GBPUSD trade here would amount to amplifying exposure to risk sentiment trends to unwanted levels. As such, we will remain on the sidelines for now.
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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