GBP/USD had a wild day as the “risk on / risk off” environment continued to plague the markets. The cable is tainted as the British economy is suffering from both high unemployment, and extremely high inflation. Because of this, the Pound originally sold off during the Tuesday session.
The markets whipped back into the positive side when an announcement also came out suggesting there was a plan in Europe again. However, it was proven to be suspect at best, and the markets turned back around to the downside as a result. The end was a massive doji, albeit a negative one. The trade set up should be straightforward as the long-legged doji on the chart calls for a trade in the direction of which way the market breaks out of it. If we go higher – it is to be bought. If we break below the lows – it is to be sold.
Written by FX Empire