Wednesday, May 18, 2011
Trend for 18th of May 2011
Let me talk about price action in gbp/jpy pair today. Most probably you remember that there was scheduled a fundamental report from Great Britain (Bank of England Meeting Minutes) at 8:30 GMT today. And what you saw yesterday with pound pairs that moved three hours before news release, the same scenario was repeated today. 45 minutes before the above mentioned release the pair broke down and continued going down till the news came out. The pair went as low as 131.17 and when release came it jumped up to 131.75 level. Then it continued its short term downtrend before finding support at 130.76 (a little bit lower than my predicted 131.00 support level).
What are my predictions for the pair? If you look at 1 hour chart you will clearly see that the pair did not reach its’ former low that was reached on the 13th of May. This gives the pair some bullish momentum as the pair is slightly rising now. If you looked at RSI on 4 hour and 8 hour charts you would see that it is pushing up through 50 level, which adds more bullish momentum for the pair. By analyzing 8 hour chart you could see that the low made on the 13th was visited a few times in the past and held as important support level. It again adds more bullishness to the pair.
From the bearish side we have data from Japan coming quite soon (Gross Domestic Product Annualized). This can turn the pair around again and short term downtrend will continue. We also have some data of medium importance from Great Britain tomorrow (Retail Sales ex Auto Fuel). I don’t expect the data to move the forex market much, but my expectations might be very subjective. I will be watching price action in the pair around European session tomorrow and if the data from Japan fails to push the pair below today’s lows, then I will definitely search for opportunities to go long.
Read my previous post:
Gbp/jpy price action
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