GBP/USD Technical Analysis - GBP/USD Trading: 2014-11-12

Mark Carney’s speech

At 11:30 (CET) the Bank of England Governor Mark Carney will be giving his speech today. He will be discussing the BOE quarterly Inflation Report. The report is focused on inflation expectations and the actual economy state. An excessive currency expansion may cause changes in the regulator’s monetary policy, e.g. the base interest rate hike. On the contrary, a deflation risk triggers the monetary policy easing. Therefore, today we expect a possible volatility momentum of the British currency, after the situation over the last quarter becomes clear.

Here we consider the GBP/USD currency pair on the H4 chart. The price keeps moving in the daily bearish trend, but at the same time we can see the H4 trend line breakout in the direction of the green zone. The signal is strengthened with the neckline intersection of the bearish graphic model “head and shoulders”. We could have considered this position as an opportunity for opening a buy order, if we are not taking the D1 trend line proximity into account. It limits the potential motion compared to the possible risks. For this reason we can turn to the reflecting pattern called "Hound of the Baskervilles", which will be formed if the price breaks the support level at 1.57951. This level can be used for placing a pending sell order. It is confirmed by Parabolic historical values, Bill Williams fractal and the lower boundary of DonchianChannel. There is a high probability that this mark intersection would cause a strong bearish momentum. Currently, the price gives the first signs of a downward uncertain movement. You should pay attention to the "shooting star" candlestick pattern (marked in yellow on the chart). Besides, the formation of a new low of the RSI-Bars oscillator signal confirms the future price reversal. Conservative traders are recommended to wait for the oscillator support level breakout at 32.9498%, which will precede the main price down movement.

The preliminary Stop Loss can be placed above 1.59522. This level is confirmed by the fractal and the upper boundary of DonchianChannel (13). After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position	Sell
Sell stop	below 1.57951
Stop loss	above 1.59522

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