UK Retail Sales Due Shortly – The Next Breakout After 3 Days Of Consolidation?
GBP finally made its big move on Tuesday when GBP/USD jumped 400 pips after an initial tumble. We were waiting for this move for weeks, but it took May and June to break the ice.
Since then, this forex pair has consolidated on a 90 pip range. That´s quite a wide range to oscillate in in just a few days, but that´s how the volatility and uncertainty in this pair is for now.
The top of the range comes at 1.2860, followed by 1.2906 which was the high on Tuesday. The bottom is very clear as well. It was the high since the break of 1.28 last October and it has turned into a support now.
We can find the 100 smooth moving average right about there, so that adds extra strength to this support level.
Are retail sales going to break the range in GBP/USD?
So, it´s been considerably quiet over the last three days and it looks like the market is waiting for another catalyst to spark the next move.
The UK retail sales will be up shortly and this piece of data is often a market mover. So the question remains, will this start the next move?
Last month we saw a considerable jump after two months of decline. This raised hopes that the previous two months were not turning into a trend (supposedly due to Brexit).
But, this month is supposed to bring another negative number which would put us back in the negative trend we were seeing in the first two months of this year.
That would obviously raise some eyebrows, but right now the market is too focused on UK elections. Everyone is wondering if some kind of miracle will occur – the Lib Dems could win and Brexit could be reversed- this of course won´t happen, although you can´t rule anything out nowadays.
So, the UK retail sales numbers won´t move the market much in my opinion, but a substantial deviation will. They´re expected to decline by 0.3% this month, so it has to be +/- 1% to get the wheels rolling for GBP.
Trade Idea #1
If retail sales decline by more than 1% then I´d suggest selling at market price for a 100-200 pip target.
Trade Idea #2
If retail sales numbers come above 1% then I would by at market price and hold, probably until 1.30
You have to manage the stop loss manually, judging by price action because there might be some whipsaws in the first few minutes after the release.
I will try to get that trade as well and open a long term forex signal here, but I´m not sure I´ll be able to get in after the numbers get released without too much slippage.
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