11, April 2013

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

General overview

Positive news about the increase in the volume of industrial production in the UK in February contributed to the growth of the pound.

But everything is not so rosy as annual data does not inspire at all. The industrial production dropped by 2.2% on an annual basis, besides the trade deficit in February rose to 9.4 billion pounds. According to the forecast the UK economy will face new cuts and the fall to the March minimums is possible.

Tenkan-Sen line is above the Kijun-Sen. Tenkan-Sen and Kijun-Sen are going downwards. The Cloud is growing. The movement is slowed down.

The pair keeps growing. The first target is 1.5360. If the pair consolidates on it will continue to grow to 1.5460.

Bollinger Bands are narrowing. We expect the correction.

MACD is above a zero line. The signal line is out off the histogram. We expect a correction. If MACD turns down that could be a signal of the direction change.

Trading recommendations

The pair is in a consolidation phase. It is most likely that the British currency won't be able to break through the key resistance level - 1.5360 and it will return to the level 1.5260. Further movement of the pound will depend on the economic data, if it is positive then the pair may rise to 1.5449. If the data is weak then the pair may fall to 1.5215.

In case of a turn back the pair will move to the level 1.5250. The next support level is 1.5180.