Thursday, January 30, 2014

British pound could push the boundaries | For every Forex pair there is a season

GBPUSD is knocking on the 200 period Simple Moving Average on the monthly chart.

It has attempted this level on a number of occasions since it fell through with it a bang in October 2008, but failed to break through. A sustained move above the monthly 200 SMA, now at 1.6629, would open up clear blue water all the way to 1.78 and beyond.

The working out of this scenario could take a little time, however, as the US dollar is also is a strengthening mode as a result of the announced ending of QE. The British Central Bank governor, Mark Carney, has apparently set his mind against the raising of UK interest rates. Any developments that could change this position might be enough to bring Cable above that 200 period SMA boundary on the monthly chart.

For every Forex pair there is a season

Certain Foreign Exchange trading pairs have their days in the sun, when they are slightly more predictable than at other times and the moves they make can be expected to be sustained in a particular direction.

We have seen this phenomenon with the Antipodeans, the Aussie dollar and the New Zealand dollar in the recent past. Before that gold was good for us. We always keep a watching brief on all of these, even when they have ceased to deliver reliably, but right now we are looking at three pairs that we think have a future for trading in the short term. They are the British pound against the US dollar, the US dollar against the Swiss franc and the US dollar against the Japanese Yen. The fundamental and technical analysis factors that impinge upon them are compelling, especially in the light of the apparent determination of the US Federal Reserve to continue with its tapering program. These are not unrelated when it comes to considering each currency, but each one also has its own characteristics.




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