Good morning team,
The GBPUSD has set up a technical bearish picture as there has been a bear flag breakdown leading into tonights BoE interest rate decision and monetary policy. Furthermore, BoE members will vote on whether to decrease bond purchases. The Bank of England is certainly not expecting to taper back its bond-buying program anytime soon due to the delta variant outbreak and ongoing Brexit negotiations, painting a short term bearish outlook. Taking a look across the stock market US equities are VERY high inside sharp rising wedge structures. Based on where the DXY is currently trading we see the possibility of a DXY rally over the coming sessions. Adding to the long DXY theory. Risk-off in the stock market would push traders into the USD.
With a very high forecast on the Friday night Non-Farm Payroll, the market could rally into the event (DXY). We will look to trade into the Non-Farm on the GBPUSD and close down the position prior to the result.
We are monitoring the DAX and AUDJPY trade, if we feel there is a risk-off move coming the trades will be closed down early.
GBPUSD 4 Hour Chart
Mirror resistance at 1.3985 which has seen rejection on the GBPUSD. There is a possible inverted head and shoulders formation setting up, so we will monitor the GBPUSD around the 1.3788 support.
GBPUSD 1 Hour Chart
There has been a lower high along with a bear flag breakdown meaning bears are in control. Any break above 1.3960 would suggest a continuation to the upside. We will use this level as our SL zone.
Trade SETUP: SELL market execution, current price 1.3890, stop loss 1.3965 and take profit 1.3735.
Stop loss: 75 pips
Take profit: 155 pips