Forex News: Major Breakouts Underway. Bulls Take Control of Medium Term Price Action
Forex News: The Euro was boosted by news that the ECB might change their forward guidance to a more hawkish tone and also by positive news coming from the German political scene, later in the week. All this triggered a huge climb, breaking last year’s high.
The break of 1.2092 shows that the long term uptrend has resumed and this makes 1.2280 the next target. This is a long term resistance that hasn’t been reached in a long time so we don’t know exactly how price will react once and if it touches it. Last week the pair has traveled a long distance to the upside and this usually calls for a retracement or a period of consolidation but as long as the pair remains above 1.2100, the bias is bullish.
Monday US banks will be closed in observance of Martin Luther King Day and no economic data will be released. Tuesday will be another slow day and action picks up a bit Wednesday with the U.S. Industrial Production and European Final CPI. These are indicators with a medium impact so we don’t expect huge movement at the time of release.
Thursday’s highlights will be the U.S. Building Permits and the Philly Fed Manufacturing Index but again, these have a low-to-medium influence on the greenback so the impact may be overlooked. The final release of the week will be the University of Michigan Consumer Sentiment scheduled Friday. This a survey that shows the opinions of consumers regarding economic conditions and it is important because a confident consumer is likely to spend more and this boosts the economy but it is not known as a strong market mover.
US Dollar weakness was present across the board last week, allowing the Pound to make substantial advances to the north after a ranging period.
The break of 1.3616 resistance marks the possible beginning of an extended period of bullish movement. The strong breakout will most likely be followed by a small retracement south but overall the pair is moving up and the US Dollar offers little resistance. The next resistance and target for the week is located at 1.3860, where we expect a bounce lower.
The Pound will be affected by only two major releases this week: the British Consumer Price Index scheduled Tuesday and the British Retail Sales scheduled Friday. The former is the main gauge of inflation in the UK, while the latter has a strong impact because sales made at retail levels represent the biggest part of consumer spending. Numbers above expectations for either one of them have the potential to strengthen the Pound.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.