It has been a profitable trading day for both euro and sterling bulls. The euro rose to a five-week high against the dollar and we were thus able to book a good profit by trading our long signal yesterday.
Trading the bullish breakout in the GBP/USD went also very well and the big question among traders is now whether there will be further gains. While momentum is still undeniably bullish, the pound is at overbought levels in larger time frames and traders should therefore prepare for pullbacks in short-term time frames. As long as the pound remains above 1.42 we favor a bullish stance, targeting at higher levels at 1.43 and 1.4350. If the pound falls below 1.4190 we expect it to extend its slide towards 1.4150 and 1.41.
The same is true for the EUR/USD: The euro remains in overbought territory and traders should therefore anticipate upcoming corrections. If the euro remains trading between 1.2490 and 1.24 a short-term uptrend channel remains intact. If the euro, however, drops back below 1.2350, the bias shifts from bullish to neutral.
Moreover, traders should bear in mind that today is Tuesday and while this is a normal weekday the so-called ‘Turnaround Tuesday’ often lived up to its name after significant price breakouts on Monday. In a nutshell, watch out for potential reversals today.
The only piece of economic data will be U.S. Consumer Confidence due at 14:00 UTC.
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