GBP/USD has made some considerable gains yesterday, and it pushed some more this morning. We broke above 1.36, reaching 1.3613 a few hours go. However, in the last couple of hours, the price has taken some steps back.

The price has slipped back below 1.36, and by the hour it has completed a retrace lower. It has reached the 20 SM (grey) on this chart, and the last two hourly candlesticks have formed two dojis.

According to the candlestick trading strategies, diojis are reversing signals. The price has reversed lower this morning, so the dojis are signalling a reverse up, and a continuation of the uptrend. According to this chart information, the smart move for the moment seems to be going long, as it looks pretty bullish to me.

The UK construction report is about to be released soon. It’s not the biggest market mover out there, but it has some considerable importance in connection to the GBP.

This sector dived into negative territory for a couple of months but came back to life in November. In December, it posted a nice recovery, but today it is expected to soften up a little bit again.

How to Play It

• Negative Reading

I don’t expect much action in the forex market if the numbers come close to expectations. If the numbers are negative, then we might see GBP/USD turn lower and probably head for the bottom of the range, which comes at around 1.32 at the moment. That being said, we will have some more important numbers from the UK tomorrow, so I wouldn’t push too far down today.

• Positive Reading

The same goes for the upside. If the numbers are positive, we might see a short lived spike. However, I don’t think GBP/USD will take out the big resistance level at 1.3650-60. I might open a sell forex signal up there myself if the buyers can push that far on some good construction numbers.