GBPUSD – The DIBS Review on a Narrow Ranging Week

GBPUSD was in a relatively tight range last week (c.200pips versus a 52-week average of >300pips of weekly range) which made for difficult conditions to catch any decent follow-through on inside bar breakouts. The chart below shows the DIBS/inside bars (red vertical line through the candles, blue horizontal line = Frankfurt open prices) during the week.

·         Monday-Tuesday was narrow range / basing type action hot on the heels of a 300-pip sell off during the latter half of the prior week. DIBS signals did not appear during the most liquid hours of the trading session, although it looks like a pre-London session inside bar on Tuesday would have gotten lucky for a downside breakout worth >1:1

·         Wednesday was the Greek vote day and GBPUSD followed a similar sequence to EURUSD, printing a DIBS before the vote and a couple of DIBS after the vote. The post-vote DIBS signals were unlucky not to be able to ride the Asia session pop on Thursday (noted on the chart).

·         Thursday-Friday were characterized by some wide ranging bars on the sell offs as GBPUSD tested its lower ranges for support, price reactions were fuelled by sloppy data releases (930 AM UK Time) on both days.

·         Friday’s late session rally was a typical inside bar reversal pattern that got going after 3PM UK time, as GBPUSD followed a strong rally in the S&P 500 to a better than expected print on the ISM.

What’s next for GBPUSD?

·         The narrow ranging week on GBPUSD might be a sign that it’s “storing up energy” in preparation for a big move up or down in the weeks to come. If that’s the case then the environment for catching some DIBS that run for 100’s of pips might be about to turn for the better on this pair.

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