Long from 1.2423...

FX:GBPUSD   British Pound/U.S. Dollar
126 0 2
As London sellers entered the fray yesterday, sterling took a nose dive from the underside of the 1.25 handle. This, as you can see, saw the H4 candles probe a support area at 1.24-1.2377 that displays confluence from the 1.24 hurdle, and a H4 trendline support carved from the high 1.2329. The day concluded with price chalking up a strong-looking H4 buying tail, which may, given the strength of its supporting zone, see prices rally today. In addition to the above H4 structures, daily action also reveals further confluence in the form of a daily trendline support extended from the low 1.1904 that is seen intersecting beautifully with the lower edge of the current H4 support area .

Our suggestions: From a technical standpoint, there’s a strong chance of a rally being seen from the current H4 support area today, possibly back up to the 1.25 handle. The only grumble our desk has noted is the fact that we have little weekly confluence supporting this trade. In fact, from the weekly chart, one can see just how strong the bears have been since June 2014!

Despite this, the H4 buying tail indicates that there are willing buyers around the H4 support area , and therefore, we have taken a long position at 1.2423 and placed our stop at 1.2382: beneath the tail of the H4 candle. The first take-profit target is set around 1.25, followed closely by the H4 supply above it at 1.2525-1.2557, which, as we explained in yesterday’s report, is also a nice-looking zone to sell from due to its converging H4 structures.

Data points to consider: MPC             member Forbes speaks at 11.30am, UK Autumn forecast statement at 12.30pm. US Core durable goods data at 1.30pm, US Jobless claims also at 1.30pm, FOMC meeting minutes at 7pm GMT             .

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