The positive CPI and retail sales data helped the pound to recover from its lows. The cable made a low at 1.5590, a 14-month low against the US dollar. The US dollar gained strength after China rate cut and Draghi comments. In terms of the economic events this week, it’s a quiet week for the pound. This week’s pound fortune or fate will rely on the GDP data which is expected to be released on Wednesday. Today, the pair opened on a bullish note, opened lower at 1.5636. The pair has nearest support at 1.5590. Panic will be triggered below this with the targets at 1.5500. Bears can challenge 100 odd pips on the down side. Considering a weekly close below 1.5500, we can expect 250 odd pips correction on the downside from the medium-term view. The pair has strong, long-term support at 1.5500. Below 1.5500, 1.5429 and 1.5300 are the other support levels.
From an intraday view, the prices are closed and trading below 12DEMA. But the 35DEMA providing enough support exists at 1.5625 on an hourly basis. On the higher side, 1.5670 will act as a resistance level. In case if the pound falls below 1.5625, the last hope for bulls exists at 1.5590. In case if the pair corrects below 1.5590 again, the selling pressure will increase . The panic will be triggered below 1.5590. On an intraday and positional basis, we are recommending selling on every upswing at 1.5675. The trading pattern is framed between 1.5590 and 1.5736. In case if the prices break below 1.5590, we recommend selling with the targets at 1.5535 and 1.5510. Below 1.5500, another 100 or 150 pips will move downside .
The material has been provided by InstaForex Company – www.instaforex.com