By: Mike Kulej
Monday turned out to be a very quiet day for currencies. At least by comparison, to the last couple of weeks. One of the best examples of just how lifeless markets became is the GBP/USD. Normally a very lively pair, it developed a daily doji pattern, which, at this location in a trend means “indecision”.
Perhaps even more interesting than the candlestick formation is the very tight trading range on Monday. The GBP/USD was contained within 80 pips, very small value indeed, considering it was not a holiday. By comparison, the 15 period Average True Range, oscillated lately between 125 and 150 pips. This type of market behavior does not last very long and the GBP/USD should experience an outburst of activity within the next 1-3 days.
The high and the low from Monday are currently the most immediate resistance/support for the price. Chances are, either one will be broken soon, and start a move at least as big as the range, or 80 pips. Aside from a short term trading opportunity, the direction of the breakout should also decide the general market bullishness/bearishness for the next few days.
