Friday’s trading session was significant for two reasons. On the one hand, the cable managed to break through the lower trend-line of the senior . On the other hand, it failed to slip below the 1.3090 mark, which correlates with location of the bottom boundary of an alleged larger, dominant . Such outcome allows assuming that this pattern will be strong enough to block another attempt of the pair to fall below the 1.3100 mark, following the general strengthening of the Dollar.
At the same time, rapid recovery of the Pounds seems unlikely as well due to presence of a combined resistance set up by the weekly PP , the 55-, 100- and 200-hour SMAs . However, a release of better than expected fundamental data through the week might provide a necessary impulse to elevate the rate at least back to the 1.3200 level.
The first arrests made in result of Robert Mueller’s investigation as well as anticipation of the upcoming interest rate hike helped the pair to prematurely break through a massive resistance set up by three moving averages plus the weekly PP at 1.3160.
In general, bulls are expected to try to push the cable to the last Thursday’s pre-fall level at 1.3270. However, today this attempt is likely to be blocked by another resistance level formed by the weekly R1 at 1.3250 and the upper trend-line of an alleged two-month long descending channel.
On the other hand, there is a need take into account effect from release of various American fundamental data later this day, which might either provide an additional impulse for a breakout to the top or drag the pair back to the 100-hour SMA.
Although the US economy showed convincing signs of growth, the Pound continued to rapidly appreciate against the Dollar yesterday. The fact that the cable managed to return to mid-October level near 1.3295 indicates how actively traders are anticipating interest rate hike by the Bank of England, which even overshadows today’s FOMC meeting.
From technical point of view, there is a need to notice that both on hourly and daily timeframes the pair is free to surge up until the weekly R2 located at the 1.3370 level (after passing through the above resistance). The southern side, in contrast, accumulated a combination of other technical barriers, such as the weekly R1, the monthly PP and three moving averages.
Until release of the American data, the pair is expected to move horizontally near 1.3270. Afterwards, in case of plunge it is likely to be stopped by the 200-hour SMA fluctuating near 1.3180.
In result of release of various American fundamental data, the cable stopped the surge and returned back to the 1.3250 mark, from which it made a rebound in the beginning of this trading session. Until announcement of the Bank of England decision, the pair most probably is going to move horizontally near the 1.3290 level. Afterwards, the Pound is widely expected to strengthen.
The surge might be quite sharp, as northern side contains no barriers except for an alleged resistance at 1.3338 and the weekly R2 at 1.3370. The upside momentum might be additionally reinforced if President Trump will pick Governor Powell, as the new Fed Chair. The upward movement is also supported by existence of a medium-term ascending channel.
A long awaited decision to raise the interest rate led to 110 points depreciation of the Sterling against the Dollar. Initially, the bottom trend-line of a dominant ascending channel managed to halt the pair near 1.3120. However, the subsequent Governor Carney press conference boosted this process and bears manged to push the pair to the weekly S1 at 1.3040.
On daily chart it seems that yesterday’s downfall confirmed existence of a new medium-term descending channel. However, even in that case it looks like the Pound has to restore some lost positions before making a decisive breakout from the dominant ascending channel.
An upcoming release of the British Services PMI might provide some small impulse for the upward movement. On the other hand, the two resistance levels near 1.3085 and 1.3107 most likely will manage to constrain the pair.