Forex News: Price Reaches Dynamic Resistance. Bounce-or-Break Scenarios in Play
Forex News: Friday the US Dollar was weakened by disappointing values for the University of Michigan Consumer Sentiment survey and the Building Permits, so overall the pair showed bullish price action, reaching the 50 period Exponential Moving Average.
After coming close to 1.1120 support, price started to climb and stopped at the 50 EMA; however, this happened because the markets closed for the weekend, so we cannot say for sure if we are dealing with rejection or if the pair will continue upwards. The question will be answered today: a break will make 1.1240 the first target, while a bounce lower will take price into 1.1170 and possibly 1.1120. We slightly favour a move lower because lately the pair has been under bearish pressure.
The economic calendar lacks major events for both currencies in the pair, so the technical aspect will prevail. It must be noted however that FOMC Member Dudley will speak at 12:00 pm GMT and FOMC Member Evans will speak at 11:00 pm GMT and this could generate increased volatility but the impact depends on the matters discussed and cannot be anticipated.
Price continued its choppy movement Friday and breached the 50 period Exponential Moving Average only to return below it almost immediately. Overall we didn’t see clear determination from either part, and the pair is mostly ranging.
The last candles are showing long wicks, mostly in their upper side, which is a sign of rejection. This makes us anticipate a drop below 1.2770 if the 50 period EMA is not broken. However, the pair lacks clear direction so we cannot rule out a bullish move, which will probably find resistance at 1.2820. Overall, we expect a slow trading session today.
Similar to the Euro and US Dollar, the Pound will not be affected today by major economic releases, so the main focus will be on the technical side.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.