We have a head and shoulder breakout last month coupled with a bearish break from falling wedge formation and a monthly closing below 1.3363 (50% Fibonacci extension of 2007 high – 2009 low – 2014 high).
Action this month has been anything but encouraging for the bulls. We failed to hold above head and shoulder neckline as well as 1.3363, in a way marking a failure to re-enter falling wedge formation.
Hence, we are heading into the next week’s BOE rate decision on a weak footing. Area between 1.3363-1.3440 is a tough nut to crack. Rejection again at these levels is likely to result in a drop to 1.29 handle.
Going by monthly chart, 1.2459 (61.8% Fibo expansion) is a next major support if 1.2789 is breached.
Only a monthly closing well above 1.3440 could convince me the bearish trend has run its course.
Action this month has been anything but encouraging for the bulls. We failed to hold above head and shoulder neckline as well as 1.3363, in a way marking a failure to re-enter falling wedge formation.
Hence, we are heading into the next week’s BOE rate decision on a weak footing. Area between 1.3363-1.3440 is a tough nut to crack. Rejection again at these levels is likely to result in a drop to 1.29 handle.
Going by monthly chart, 1.2459 (61.8% Fibo expansion) is a next major support if 1.2789 is breached.
Only a monthly closing well above 1.3440 could convince me the bearish trend has run its course.
