On Friday, after reaching the 1.3250 mark the cable made a sharp turnaround and slipped back to the 1.3180 level. From fundamental point of view, this movement matched with release of better than expected American housing data. But from technical perspective it signified a rebound from an intersection of upper boundaries of two large descending and ascending channels. In this way bears have outlined strong through which the pair is unlikely to climb without proper upside momentum.
For this reason, the currency rate is expected to make another reversal even though the bottom trend-line of a junior provides perfect support for gradual soar. The upcoming movement to the south is additionally supported by the aggregate market sentiment, which is 51% .
From technical perspective, the cable was expected to make a rebound from an intersection of two senior channels. However, the news about improved offer for the final financial settlement made by the British government led to spike of the price of Pound.
Depending on how markets will interpret today’s inflation report hearings, the pair might either return back into boundaries of the dominant channels or confirm its yesterday’s breakout to the top.
In any case, there is a need to take into account that the current advance in junior ascending channel is additionally supported by the rising 55-hour SMA as well as the monthly PP at 1.3238. But in the meantime, majority of traders continue to have bearish outlook on the pair.
As markets did not pay much attention to the UK Inflation Report Hearings, the cable continued to slowly surge along the rising 55-hour SMA within the junior ascending channel. By now, the currency pair has practically bypassed the upper boundaries of both senior channels. A small positive signal, such as the Autumn Forecast Statement, would be enough to make a decisive breakthrough.
Once this happens, the exchange rate will face no resistance level up until the weekly R1 located at the 1.3300 level. However, the release of data on the US Core Durable Goods Orders alter this scenario and drag the currency pair back to the monthly PP at 1.3238.
Although initially the Pound was hit by first lines of the budget announcement, the subsequent revelation of details changed the sentiment lifted the rate to the weekly R1 at 1.3300, as expected. A release of the Fed Meeting Minutes only deepened the surge and pushed the rate to October high at 1.3338, as markets concentrated on traditional concerns over inflation and uncertainty about interest rate hikes next year.
During this trading session the pair is projected to move in southern direction not only because the upside momentum came to an end but also because it made a rebound from the upper edge of still active junior ascending channel. Even though today the UK will release its Second Estimate GDP no substantial volatility is expected due to upcoming holidays in the United States.
In line with expectations, the cable continued to gradually moving to the bottom after making a rebound from the upper edge of a currently active ascending channel that was additionally secured by resistance line at the 1.3338 mark.
In first hours of this trading session the pair managed to bypass the weekly R1 at 1.3300 and the 55-hour SMA at 1.3293, which suggests that the rate is likely to reach the opposite side of the channel by the end of the day. The only obstacle that might alter this scenario and push the pair back to the 1.3290 level is the rising 100-hour SMA. In the upcoming days the currency rate most probably is going to continue heading to the bottom, trying to return to an area near the 1.3230 mark.
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