GBP/USD: Technical outlook and review.

FX:GBPUSD   British Pound / U.S. Dollar
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Early on during yesterday’s London trade, we saw price paint back-to-back indecision candles around the 1.5300 figure on the 4hr chart. Nevertheless, as Cable entered into the American session, buyers stepped in and pushed this market to highs of 1.5347 before aggressively plummeting lower following the FOMC statement.

As can be seen from the chart, 1.5300 was taken out and the day ended with price connecting with the 1.5261 area – a swap support base. Although there is some buying interest being seen here at the moment, we have no plan to enter long from this area. Instead, we have our beady little eye on the demand zone seen below at 1.5199-1.5218. The reason? Scan across to both the weekly and daily timeframes. Check out how weekly price shows room to continue lower to connect with channel support extended from the low 1.4564, and daily action reveals price hovering above demand at 1.5199-1.5245. If price stabs into this daily area, we will likely see the aforementioned 4hr demand zone hit as well.

Given the converging structures seen at the above said 4hr demand areas, we are placing a pending buy order at 1.5220 with a stop at 1.5185 (below a 5 minute demand). Granted, this is quite a large stop. The reason for this comes from seeing psychological support lurking deep within our buy zone, thus giving well-funded traders the opportunity to fake both our demand area and the round number at the same time!
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