Posted by Edward Moya on Tue, Jun 16, 2015 @ 09:17 AM
Save time by using the PremiereTrade Software. Green you Buy, Red you sell. Here is the GBP/USD in the Green and moving to the Upside.
Earlier in London, UK inflation picked up for the first time since October. UK CPI in May printed as expected at 0.1%, but the reaction was negative because many expected a much higher number. Sterling initially sold off following the release to the session low of 1.5540 before rallying to 1.5639.
Price action on the 60-minute GBP/USD chart shows that the strong recovery that has been in place since the beginning of last week is finding strong resistance from a potential bearish butterfly pattern. Point D is targeted by both the 161.8% Fibonacci expansion level of the X to A leg and the 127.2% Fibonacci expansion level of the B to C move. If valid, we should see price target fresh session lows. Key support will come from the 200-day SMA which is trading around the 1.5490 level.
If the pattern is invalidated and bullish momentum remains strong, further upside could target the May 21st high of 1.5699. If price breaks out above the 1.57 barrier, 1.5820 will provide major resistance.
The trade: Sell GBP/USD 1.5640, with a stop loss at 1.5690 and take profit at 1.5490. The risk/reward ratio is 1:3