GBP/USD Does not Care about the Strong US Jobs Data

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GBP/USD Does not Care about the Strong US Jobs Data

Well, technically, you did see a brief dip in the GBP/USD following the dramatically stronger-than-expected NFP report. However, as you can see in the 1H chart, the market supported GBP/USD immediately after the dip, defending the 1.71 handle.

GBP/USD 1H Chart 7/3
gbpusd 7/3
The 1H chart shows a very bullish market in place already this week place based on the moving averages and a simple look at price action.

The prospect of a 2014 BoE rate hike still looms in the mind of traders, while the rate hike projection for the FOMC struggles to stay mid-2015, and could be pushed back if Q2 GDP disappoints. The jobs data was a temporary save of USD sentiment, and needs more to build up. UK data has been building up the GBP by way of interest rate outlook, so the GBP/USD may still have room to rally as today’s price action is suggesting.

There are still a couple of challenges before breaking into bullish continuation. In the 1H chart, you see that the 50-day SMA is around 1.7150. If price stays south of this factor, the short-term outlook remains sideways, and maybe even slightly bearish, but within the context of a correction. A push above the 50-hour SMA puts the focus back at 1.7177. At this point the resistance will look fragile, and a breakout would be imminent.

On the compressed weekly chart, you can see that above 1.7177, the next level to monitor is 1.7337, which is 50% retracement of the dip from 2.1161 to 1.3514 (during the financial meltdown).

GBP/USD Weekly Chart 7/3
gbpusd weekly chart 7/3

Then we can expect some consolidation around the 50% retraement, but if price can stay north of 1.70 on a correction, the 61.8% retracement at 1.8240 would be in play.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.