Consolidation Continues Ahead of Important Data
Dollar continues to consolidate ahead of important data in the coming days including ISM Services and NFP as well as other Central bank meetings. Oct pending home sales came in weaker than expected by dropping 1.7% to 107.2m annualized rate. Released earlier, Eurozone PPI was unchanged mom, dragging yoy change to 4.0%, below expectation of 4.1%. Reactions were muted. Technically speaking, even though mild divergence condition is noted in 4 hours charts, as dollar is still held by near term resistance, bias remains on the downside and further fall is still in favor after the current consolidation.
GBP/USD
Daily Pivots: (S1) 1.9674; (P) 1.9760; (R1) 1.9889;
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Cable’s retreat from 1.9846 continues today. Despite bearish divergence condition in 4 hours RSI, short term bias remains on the upside as long as cable stays above 1.9634 support and further rally is still in favor to follow towards next upside target of 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9971. However, below 1.9634 will suggest a short term top is formed and could bring correction to 4 hours 55 EMA (now at 1.9449) or lower. But downside should be contained above 1.9168 resistance turned support and bring another rally.
In the bigger picture, break of 1.9554 high added much credence to the case that multi-year up trend from 1.3680 has resumed but this is not confirmed yet. Nevertheless, medium term up trend from 1.7047 is still treated as in force before a break of 1.8834 support or clear reversal pattern forms. Hence, at this moment, we’d still expected the medium term rise from 1.7047 to continue. On the upside, 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) will be the key resistance to watch out for. Decisive break of this resistance will confirm that long term up trend from 1.3680 has resumed.
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