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Good afternoon, dear traders. Today, Charles Bean, the vice president of the Bank of England will make a statement at 15:30 (CET). It will be held at the Commercial Club in Darlington, and traditionly, investors will expect new information on the BOE monetary policy. Despite the fact that there are no fundamental changes predicted, a psychological factor of expectations may lead to increased volatility, and we use this process to enter the market.

Let us consider the British Pound behavior on the four-hour chart. We see that the bullish trend is confirmed by the ParabolicSAR signal and the Pivot channel direction. However, the room for the maneuver is limited by the daily resistance line. We recommend placing a pending buy order above the first Pivot resistance (1.67863). It makes sense to open the order 15 minutes before Charles Bean’s speech. The opening order may certainly be accompanied by crossing the Pivot signal, so we get an additional trend confirmation. A reliable risk limit is amplified by the nearest minimum and the ParabolicSAR signal at 1.67049.

As we have already noted, this situation requires accuracy when determining the profit-taking level. The 161.8% Fibonacci target is above the daily resistance. In this regard, we will set the first target at the level of the nearest historical maximum at 1.68153. While crossing this level, patient traders can switch positions into a break-even state and expect the daily resistance breakthrough. If this happens, the stop loss can be moved below the last signal level of the ParabolicSAR. The fact is that in case of daily breakthrough, there is a high probability of a strong momentum and we can afford to increase the risk, keeping the return/risk ratio at the same level.

GBPUSD technical forex chart-10-03-2014 foreign exchange currency trading

Further  reading: Pound dollar forecast.