Interesting PA seen on the pound, traders...
Despite below par UK service PMI data and reports the UK government has imposed a 1-week deadline to resolve the remaining key issues on Brexit with the EU, the GBP/USD ended Monday’s segment marginally on the front foot, up 0.11% (open/close).
Our technical reading shows H4 price is poised to extend recent gains and possibly grapple with its 1.31 handle. Note 1.31 not only displays a reasonably sound history, it’s also accompanied by a supply marked with a black arrow at 1.3131-1.3093 along with the RSI indicator testing its overbought value. What’s also notable from a technical perspective is daily structure. As we write, the unit is trading above resistance at 1.3038, potentially clearing the river north towards trend line support-turned resistance (taken from the low 1.2661) that merges closely with 1.31 on the H4 scale.
While 1.31 appears attractive for shorts according to H4 and daily structure, weekly price continues to sculpt a range between demand at 1.2589-1.2814 and a supply drawn from 1.3472-1.3204. Of late, the market tested the lower limit of this consolidation and responded in reasonably strong fashion. This places a question mark on 1.31 as a sell level since the weekly timeframe could be heading for the top edge of its range: supply at 1.3472-1.3204 – in other words the 1.32 handle!
Areas of consideration:
On account of the above, two possible scenarios are in the offing:
1. A retest of October’s opening level at 1.3031 (H4) as support in the shape of a bullish candlestick configuration (entry/stop parameters can be defined by the candlestick structure), is, in view of the overall picture currently suggesting a move higher, worthy of consideration, with an upside target positioned at 1.31.
2. Though weekly price suggests the pair may extend beyond 1.31, a bounce from this region is still promising in view of its surrounding confluence. To be on the safe side, however, waiting for additional candlestick confirmation to form is an option (entry/stop parameters can be defined by the candlestick structure). In terms of targets, the first port of call is October’s opening level at 1.3031, though price could turn higher before this barrier as weekly buyers are also in play (highlighted above). Therefore constant monitoring of the position is recommended.
Today’s data points: US congressional elections.
Our technical reading shows H4 price is poised to extend recent gains and possibly grapple with its 1.31 handle. Note 1.31 not only displays a reasonably sound history, it’s also accompanied by a supply marked with a black arrow at 1.3131-1.3093 along with the RSI indicator testing its overbought value. What’s also notable from a technical perspective is daily structure. As we write, the unit is trading above resistance at 1.3038, potentially clearing the river north towards trend line support-turned resistance (taken from the low 1.2661) that merges closely with 1.31 on the H4 scale.
While 1.31 appears attractive for shorts according to H4 and daily structure, weekly price continues to sculpt a range between demand at 1.2589-1.2814 and a supply drawn from 1.3472-1.3204. Of late, the market tested the lower limit of this consolidation and responded in reasonably strong fashion. This places a question mark on 1.31 as a sell level since the weekly timeframe could be heading for the top edge of its range: supply at 1.3472-1.3204 – in other words the 1.32 handle!
Areas of consideration:
On account of the above, two possible scenarios are in the offing:
1. A retest of October’s opening level at 1.3031 (H4) as support in the shape of a bullish candlestick configuration (entry/stop parameters can be defined by the candlestick structure), is, in view of the overall picture currently suggesting a move higher, worthy of consideration, with an upside target positioned at 1.31.
2. Though weekly price suggests the pair may extend beyond 1.31, a bounce from this region is still promising in view of its surrounding confluence. To be on the safe side, however, waiting for additional candlestick confirmation to form is an option (entry/stop parameters can be defined by the candlestick structure). In terms of targets, the first port of call is October’s opening level at 1.3031, though price could turn higher before this barrier as weekly buyers are also in play (highlighted above). Therefore constant monitoring of the position is recommended.
Today’s data points: US congressional elections.
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