I was asked on Twitter about my short positions and if I see a general sell-off in the market. I have been bearish on the GBP/USD for some time now — really since the BoE revealed it was more dovish than the Federal Reserve earlier this month. And since, then there have been some interesting technical developments that further support my bearish stance.
- @tweetertrades pointed out a head & shoulders on the daily chart. I agree with him. If that plays out, we could target MT support at 1.5981.
- Also, on the daily chart, the Fibonacci retracement levels played perfectly. You know what I think about Fibo levels and the GBP/USD.
- Fundamental landscape is ripe for further GBP weakness. FOMC minutes this week should reveal a cautiously bullish Fed while economic data should continue to show a recovery in manufacturing while the consumer remains weakened by unemployment and wage stagflation. The USD is poised to gain in this environment.
So do I see a sell-off in the market this week? Depends on which vehicle you trade but be ready for USD strength this week headed into NFP. Employment number will be big on Friday as it will either confirm or rebuke the notion that the US economy is seriously on the mend and that the rest of the world economy is not too far behind.
