Dollar Extends Recovery After Rise in Existing Home Sales
Existing home sales unexpectedly rose by 3.9% in Feb,
the fastest pace in three years. Sales rose to an annualized rate of 6.69m, much better than expectations of 6.31m and
a revised number of 6.44m for Jan. Viewed together with a stronger than expected rise in housing starts earlier this week, these data
points suggest that there may be ‘sign of stabilization’ in the housing market, rather than continuous ongoing adjustment. Dollar is supported by the data and recovers further against majors.
GBP/USD
Daily Pivots: (S1) 1.9597; (P) 1.9661; (R1) 1.9709;
More
Cable’s pull back from 1.9726 continues today. As discussed
previously, with 4 hours MACD below signal line, and RSI dropped back from overbought region, a short term top has likely formed at 1.9726 already. Hence, further consolidation is in favor with risk of another pull back towards 1.9552 support. But consolidation should be brief as long as downside is contained above 1.9552 support and rally should resume sooner rather than later.
On the upside, break above 1.9726 will indicate recent rally has resumed for 1.9913 high first. However, on the downside, below 1.9552 support will suggest that lengthier consolidation will likely follow with risk of further pull back to 1.9505 resistance turned support.
In the bigger picture, strong rebound from mentioned 23.6% retracement of 1.7047 to 1.9913 at 1.9237 favors the case that cable’s corrective fall from 1.9913 is merely correction to the rise from 1.8517 only. Sustained break of 1.9672 resistance will add more weight to this view and should bring another high above 1.9913 and attempt to meet 2.0106 cluster resistance before having a medium term reversal.
However, note that bearish divergence conditions remains in weekly RSI and daily MACD, suggesting a medium term top is around the corner and the up trend from 1.7047 might complete at 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). On the downside, break of 1.9395 will turn focus back to 1.9183/9237 support zone again.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY) here.
Shing-Ip Tsui is the founder and CEO of
www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.