GBP/USD Signal-Nov. 27, 2013

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By: DailyForex.com

Risk 0.50%
Enter short at 1.6250 if this price is reached between 08:00 and 11:00 London time today.
Stop loss at 1.6314.
Move stop loss to break even at 1.6150.
Take profit on half of the position at 1.6100.

This pair is likely to be the pair of greatest interest in the market today, as there is high-impact news due on both GBP (the GDP estimate at 09:30 London time) and USD (Core Durable Goods Orders and Unemployment Claims at 13:30 London time).

Technically, we are close to a major resistance zone of 1.6250 – 1.6377 that has held for 2 years, with the level around the key psychological number of 1.6250 holding during 2013 so far. A double top has been formed here over the past several weeks after some very bullish action, forming a descending flag:

GBPUSD Daily 112713

Although the action has been bullish during the past two weeks and also over recent days, the greatest reward potential is to the down side after a triple top is formed. If the GBP news is not too positive, and the USD news is positive, the trade is likely to be profitable if triggered, following a sell-off after the current weekly high is exceeded.

Dropping down to the H4 chart below, there are some local trend lines that need to be broken to the down side for this trade to take off, and support levels in blue that must be breached. The progress of the trade can be monitored there:

GBPUSD H4 112713

It is suggested to protect the trade once the first major support level at around 1.6150 is reached.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.