Dollar Retreats on Profit Taking

Despite edging higher initially, dollar retreats on profit taking after solid retail sales report.
December sales was better than expectation with 0.9% rise growth in headline sales and 1.0% growth in ex-auto sales, better than expectation of 0.6% and 0.5% respectively. However, the positive effect on dollar was offset by downward revision of Nov’s data from 1.0% headline growth and 1.1% ex-auto growth to 0.6% and 0.7% respectively. Nevertheless, the retail sales data released today is still solid with consecutive two months growth.

On the other hand, export prices increased 0.7% mom in Dec, beating expectation of 0.3%. Import prices also beat expectation by increasing 1.1% versus consensus of 0.6%, thanks to rising petroleum price which rose 4.8%. Prior month’s import price growth was also revised upward from 0.2% to 0.5%.


Daily Pivots: (S1) 1.9332; (P) 1.9434; (R1) 1.9551;


Cable’s rise from 1.9261 continues towards mentioned 1.9564 cluster resistance (61.8% retracement of 1.9750 to 1.9261 at 1.9563) as expected. At this point, intraday bias remains on the upside as long as cable stays above 1.9452 support. Below 1.9452 will turn intraday outlook consolidative first.

As discussed before, sustained break of 1.9564 resistance will strongly suggest that corrective fall from 1.9846 has already completed and further rise should be seen to 1.9750 resistance and then 1.9846 high. On the downside, a break below 1.9315 low is needed to shift short term bias back to the downside for 1.9177 cluster support (50% retracement of 1.8517 to 1.9846 at 1.9182, 23.6% retracement of 1.7047 to 1.9846 at 1.9185)

In the bigger picture, with 1.9177 cluster support (50% retracement of 1.8517 to 1.9846 at 1.9182, 23.6% retracement of 1.7047 to 1.9846 at 1.9185) remains intact, we’re still holding on to the preferred case that price actions from 1.9846 is merely correction to rise from 1.8834 only. That is, cable’s medium term up trend from 1.7047 is still in progress and further rise is expected to follow towards 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). But close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches 2.0106 cluster resistance. On the downside, sustained break of 1.9177 cluster support will turn medium term outlook neutral and argue that the whole rise from 1.7047 has possibly completed. Break of 1.8834 will add further weight to this case and turn focus back to 1.8517 support.

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