Slobodan Drvenica
Windsor Brokers
Cable lost traction on Tuesday and fell around 100 pips, deflated by downbeat CBI survey of the retail sector and strong rise of EURGBP cross.
Fresh weakness moves focus to the lower boundary of the range in which the price action moves for the sixth straight day.
Long upper shadows of daily candles points to strong headwinds bulls face at 1.42 zone, following few spikes close to 2021 high (1.4238), but repeated failures to register a daily close above 1.4200 handle, generate initial signal of stall and possible pullback.
But these signals require verification on break and close below two initial pivotal supports at 1.4124 and 1.4100 (10DMA / Fibo 23.6% of 1.3669/1.4233 rally) that would expose next key support levels at 1.4038/18/00 (20DMA / Fibo 38.2% / psychological), break of which would confirm reversal.
The other two scenarios are: extended consolidation above 1.4100 ahead of continuation of larger uptrend and healthy correction which will be contained above 1.40 zone before bulls regain traction.
Daily techs are positive overall and support both scenarios, but strong loss of bullish momentum and stochastic reversing from overbought territory on weekly chart warn of deeper correction.
Res: 1.4171; 1.4200; 1.4238; 1.4265
Sup: 1.4124; 1.4100; 1.4036; 1.4020
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
Recommended Content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.