The British pound had a solid start to the London session and its gains accelerated once the British economy had two positive economic readings. UK Markit Household Finance Index had the best reading since the index began in 2009 with a 43.1 reading. UK labor claimant count improved to -30.4k and the unemployment rate fell to 6.9% from 7.1%.
Price action on the daily chart shows that price went from a bullish Gartley pattern right into a bearish ABCD pattern. Price is tentatively respecting 1.6686, which is the 50.0% Fibonacci of the C to D leg of the bearish ABCD pattern. The positive economic data now is potentially forming a triple top pattern that may only provide us with a limited pullback. Momentum traders may jump back on this trade if we see fresh highs.
The trade: Buy GBP/USD at 1.6820 with a stop loss at 1.6780 and a take profit at 1.6900. The Risk/Reward Ratio is 1:2.
Edward J. Moya
WorldWideMarkets Online Trading