Anyone feel the 1.32 handle is worthy of a bounce lower today?
Following a lower-than-expected UK inflation print in the early hours of London trade yesterday, the unit cracked below the 1.31 handle and clocked a low of 1.3073. As can be seen from the H4 timeframe, nevertheless, price failed to sustain this momentum and quickly reversed. Despite a better-than-expected US PPI reading, the dollar tumbled lower, thereby bolstering the GBP and forcing price beyond the H4 mid-level resistance 1.3150 to highs of 1.3186.
Over on the weekly timeframe, we can see that the British pound has been consolidating beneath a resistance level at 1.3301 since early October. Capping downside in this market, however, is a daily trendline support extended from the low 1.2108 and a daily support area coming in at 1.3058-1.2979. One other thing to keep in mind here is the fact that the market, at least from current price on the daily scale, displays room to rally as far north as 1.3279: a daily Quasimodo resistance line.
Suggestions: Regardless of the fact that there are daily supports in play right now, we really like the look of the 1.32 handle for a possible bounce lower today. Besides converging with a H4 trendline resistance taken from the high 1.3657, it also has a 61.8% H4 Fib resistance planted just above it at 1.3214 (green zone). We will almost certainly not take the trade though, given that daily opposition is lurking just below. However, it is still likely worth a bounce, in our humble view.
Data points to consider: UK job’s data at 9.30am; MPC member Broadbent speech at 1pm; FOMC member Evan’s speaks at 8am; US inflation and retail sales figures at 1.30pm GMT.
Over on the weekly timeframe, we can see that the British pound has been consolidating beneath a resistance level at 1.3301 since early October. Capping downside in this market, however, is a daily trendline support extended from the low 1.2108 and a daily support area coming in at 1.3058-1.2979. One other thing to keep in mind here is the fact that the market, at least from current price on the daily scale, displays room to rally as far north as 1.3279: a daily Quasimodo resistance line.
Suggestions: Regardless of the fact that there are daily supports in play right now, we really like the look of the 1.32 handle for a possible bounce lower today. Besides converging with a H4 trendline resistance taken from the high 1.3657, it also has a 61.8% H4 Fib resistance planted just above it at 1.3214 (green zone). We will almost certainly not take the trade though, given that daily opposition is lurking just below. However, it is still likely worth a bounce, in our humble view.
Data points to consider: UK job’s data at 9.30am; MPC member Broadbent speech at 1pm; FOMC member Evan’s speaks at 8am; US inflation and retail sales figures at 1.30pm GMT.
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