Going into the UK Monetary Policy Summary, here are 3 potential pairs that I am monitoring. The volatility from this event might push prices towards the key areas identified -
Price is currently still in a down trend. A deeper retracement back to the 1.3325 area would present a decent shorting opportunity. As long as price remains below 1.3345, our technical bias on GBP/USD is still to the downside. A break and close above 1.3345 would invalidate this potential setup.
Price formed a double top divergence with RSI, and price has broken and closed, forming a new low below the neckline at 0.8490. A retracement back to the 61.8 fibonacci level at 0.8515 would present a good opportunity to short the EUR/GBP.
The potential trade idea on GBP/JPY is to fade the extreme zone of the price movement. With the upcoming tier one news releases from the UK, we would look for price to exhaust around these two key areas. The upper bound is around 137.87; and the lower bound is around 133.88. Lookout for signals of price exhaustion, i.e. a pin bar formation, or an engulfing formation for confirmation to take the trade.
SUMMARY
- Lookout for the overall tone and outlook of the Monetary Policy Summary.
- Look for short opportunity on GBP/USD if the overall sentiment is dovish.
- Looking for long opportunity on EUR/GBP if the overall sentiment is hawkish.
- On either side, look for opportunity to fade the extreme exhaustion of price on GBP/JPY.