Cable is still feeling the pressure from Wednesday's dovish BoE quarterly inflation report. The disappointing trade balance which showed deficit widened to GBP 7.5 billion in March, put a lot of pressure on the GBP/USD pair. By the end of Thursday session the pair has bottom at 1.4571.
Friday early session started with a possibility of a reverse head and shoulder pattern with Thursday’s low as the bottom of the reverse head. The pair than stride upward within a uptrend channel(refer to 5 MTF chart below). By Tokyo Lunch time, a toppish double top is forming at 50% fibo retracement.
My first entry with a sell position was at point A(refer to 1MTF and 5MTF charts below). The 5MTF showed a divergence in RSI and MACD while on 1MTF there was a penetration of uptrend line and all indicators showing a sell position. Target was at previous day low at 1.4571.
Second entry with a buy at point C with indicators at 5MTF and 1 MTF showing a buy signal. Target at D with resistance of the uptrend line, 200 EMA(5 MTF) and 50% fibo retracement.
