IKOFX Daily Market Analysis

[team.ikofx]

AUDUSD Breaks Down Ahead Of RBA

vThe Australian dollar is trading lower against the US dollar after climbing to as high as 0.9374 recently. There is an important risk event lined up in a few hours from now i.e. the Reserve bank of Australia will be announcing the key interest rates. The forecast is slated for no change, and the central bank is mostly expected to keep the interest rates at 2.50%. Moreover, the Australia’s current account data was published during the Asian session. The outcome was a touch better than expected, as the current account came in at -13.7B, compared to the expectation of -14.0B. However, the AUDUSD pair was seen trading lower after the release and broke the 0.9330 support area.

There was an important bullish trend line on the hourly chart for the AUDUSD pair. The pair about an hour ago broke the mentioned trend line and traded close to the 0.9310 support area. Moreover, the pair has managed to breach the 100 and 200 hourly moving averages, which can be considered as a negative sign in the short term. The pair is heading towards the 50% fib retracement level of the last move higher from the 0.9237 low to 0.9374 high. The hourly RSI is also around the extreme levels. So, there is a chance of a short term spike higher in the pair, but which might find resistance around the broken trend line. Moreover, the 100 hourly moving average could also act as a strong barrier for the pair.

On the downside, initial support can be seen around the 50% fib level, followed by the 61.8% fib level. The most important support is around the 0.9280-60 area.

Overall, selling rallies remain a good option in the near term until the pair is trading below the 100 hourly moving average.

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[team.ikofx]

EURGBP Skyrockets As British Pound Tumbles

The Euro was seen trading higher against the British pound, as the latter one got hammered yesterday due to the news surrounding of the Scottish independence. The GBPUSD pair is trading around the 1.6460 level, and the EURGBP pair traded as high as 0.7944 level. There is a fear surrounding regarding the Scottish independence which is causing the slide in the British pound. It looks like the EURGBP pair might continue trading higher in the near term if the mentioned fear does not settle down. The UK services PMI will be released during the London session. Let us wait and see whether the release can bring in some relief for the GBPUSD pair or not.

There is an important bullish trend line on the 4 hour chart for the EIRGBP pair, which is likely to act as a catalyst for the pair. Currently, the pair is trading around the 100 moving average (4H), which is acting as a hurdle for the pair. If the pair manages to clear the same, then the next resistance can be around the highlighted bearish trend line. So, there is a chance of a minor correction from the current or a bit higher levels, which can be seen as a buying opportunity. If the Euro buyers succeed in breaking the trend line, then a move towards the last swing high of 0.8036 is possible in the short term.

On the downside, initial support can be seen around the 200 moving average (4H), and a break below might call for a move towards the 0.7920 support level. The 4H RSI is around the extreme mark, which might cause a pullback in the pair.

Overall, buying dips could be preferred if the pair continues to trade above the 200 moving average (4H).

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[team.ikofx]

Upside Not Over in USDJPY

The US dollar traded sharply higher against the Japanese yen recently, and at present correcting lower. However, it cannot be seen as a trend change, as the USDJPY pair still remains supported on dips in the near term. Fundamentally, the US dollar is on the positive side, and one of the recent examples was the US factory orders. The US factory orders climbed by 10.5%, according to a report published yesterday. One cannot deny that a short-term correction is due in the US dollar, but it can only be considered as a buying opportunity. Today, the US ISM non-manufacturing PMI data will be published, which if comes out on the positive side could lift the US dollar moving ahead.

There is an important bullish trend line on the hourly chart of the USDJPY pair, which might act as a strong support on the downside. One more critical point to note from the charts is that mentioned trend line is sitting right around the 100 hourly moving average. So, there is a high probability that the pair might find buyers around the 104.60 level if reached in the short term. Moreover, the 38.2% fib retracement level of the last move higher from the 103.55 low to 105.30 high also sits around the mentioned support area. Let’s see whether the pair corrects lower from the current levels or not, as the US dollar buyers might put up a fight around the 104.60 area.

On the upside, initial resistance can be seen around the 105.30 level, followed by the previous swing high of 105.50 level. The hourly RSI is below the 50 mark, and currently trying to break the same.

Overall, buying dips remain a good option until the pair is above the 100 hourly moving average.

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[team.ikofx]

EURUSD Hammered Post ECB Rate Cut

The Euro was absolutely murdered yesterday against all major currencies, as the European central bank decided to reduce the rates further from 0.15% to 0.05%. The EURUSD pair was slaughtered, as it traded below the 1.30 support area, and collapsed more than 250 pips in a single day. This was one of the biggest declines in the Euro in the past few months. There was a monster support around the 1.30 area, but the Euro sellers showed no mercy, and pushed the EURUSD pair below the same in one go. All the major technical indicators are pointing oversold readings, but it hardly matters sometimes when the market is in such a mood.

There is a bullish trend line connecting from the 1.2660 low, which is now coming around the 1.2900 area. It would be interesting to see whether the pair can manage to hold the downside around the mentioned area or not. The pair has managed to clear the 76.4% fib level of the last move higher from the 1.2660 low to 1.3993 high. So, it has opened the doors for further downside towards the full 100% extension. There is a big divergence forming on the daily chart of the pair, which is suggesting a pullback might be on the cards. However, we need to first see how the pair reacts around the 1.2900 support area.

A break below the mentioned trend line and support area might call for more losses towards the 1.2660 swing low. However, such moves can ignore and break any kind of support.

Overall, selling rallies is a wise option moving ahead as long as the pair is trading below the 1.3000 level.

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[team.ikofx]

British Pound Collapses As Scottish Fear Escalates

The British pound opened this week with more than 120 pips lower against most major currencies as the Scottish independence fears escalated. According to a report, the YouGov survey for the Sunday Times newspaper suggests that there is a minor lead for the Scottish independence, which is causing nerves in the market. The GBPUSD pair opened below the 1.6200 support area and traded as low as 1.6165. This is one of the ugliest gaps seen in the long time for the pair. The pair has managed to retrace around 50 pips during the Asian session, but the bias remains bearish in the near term until the fear settles down.

There was a sliding channel or what we can call as a triangle was formed on the 4 hour chart of the GBPUSD pair, which was broken during the last week. This week’s opening has further widened the gap, and the gap close level might act as a strong resistance area for the pair. The 23.6% fib retracement level of the last drop from the 1.6643 high to 1.6165 low is now coinciding with the broken channel support trend line. So, a move closer to the 1.6280-1.6300 area might find sellers. The 50% fib level comes around the 1.6404 level, which could act as a pivot zone for the pair in the near term.

On the downside, initial support is around the recent low of 1.6165. If the pair breaks the mentioned level, then it would open the doors for a downside acceleration towards the all-important 1.60 area.

Overall, selling rallies is a good option moving ahead as long as the pair is trading below the 1.6400 area.

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[team.ikofx]

Aussie Struggling To Hold Ground Against US Dollar

The Australian dollar resiliency gave up against the US dollar yesterday, as the AUDUSD pair collapsed during the NY session. The pair failed to break the 0.9380-0.9400 barrier and moved lower. There were a couple of economic releases lined up during the Asian session, including the Australian home sales data and NAB business confidence. The outcome was not at all encouraging, as the Australian home loans managed to register a gain of 0.3% only whereas the forecast was of a 1% rise. The NAB business confidence also fell from 11 to 8. So, this might further add pressure on the Australian dollar bulls in the short term.

There is a triangle forming on the 1 hour chart of the AUDUSD pair, which acted as a hurdle for the pair recently. The pair is now trading below both the important moving averages i.e. 100 and 200 hourly moving averages. Currently, it is trading around the triangle support trend line, and consolidating around the 0.9280 level. The 0.9280-60 support is a critical zone for the pair, and it would be interesting to see whether the pair manages to bounce from the mentioned area or not. The upside should be contained around the 100 hourly moving average, and sellers might appear around the 0.9320 level.

On the downside, a break below the 0.9260 level might take the pair towards the 0.9230 level. Any further downside acceleration could take the pair towards the all-important 0.9200 support area. The hourly RSI is around the extreme levels, which means there is a chance of a short-term bounce.

Overall, selling around the 100 moving average is a good call until the pair is trading below the 0.9320 pivot area.

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[team.ikofx]

EURGBP Retains Ground, More Gains Ahead

The Euro surprisingly turned out to be one of the best performers yesterday, as it not only traded higher against the US dollar, but also managed to rise against the British pound. The EURGBP pair broke an important resistance recently and traded towards the previous swing high of 0.8035 level. The economic releases in the UK were on the mixed side, as the UK trade balance data came softer-than-expected. The Euro on the other hand managed to hold the ground, and traded higher. The market sentiment remains in favour of the Euro bulls, so let’s see if the EURGBP pair can climb further in the short term.

There was a monster bullish trend line on the 4 hour of the EURGBP pair, which the Euro buyers managed to break recently. Moreover, the pair is now trading above the 100 and 200 moving averages (4H). The pair is currently struggling to break the previous high of 0.8035-37, so there is a chance that the pair might move a bit lower from the current levels. In that situation, the pair is likely to find support around the 38.2% fib retracement level of the recent run from the 0.7891 low to 0.8037 high. Any downside momentum should be contained around the 100 moving average (4H), which is currently at 0.7970.

On the upside, initial resistance can be seen around the previous high of 0.8037 level. A break above the mentioned level might take the pair towards the 0.8050-60 swing resistance zone in the near term.

Overall, buying dips remain an attractive option in the short term, as long as the pair is trading above the 100 moving average.

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[team.ikofx]

USDJPY Testing Key Support; Eyes Break

The US dollar traded higher against the Japanese yen recently and surged towards the 107.00 level. However, one need to be very careful in chasing the USDJPY pair higher as the current positions are pointing extreme, which might cause a pullback soon. There was no major economic release yesterday in the US. However, the US initial jobless claims data will be published later during the NY session today. The outcome is expected to be around the 200K mark. Let’s see how the outcome plays out in the short term. The USDJPY pair is consolidating around important levels, and a break lower might call for a short-term correction.

There is an important bullish trend line on the hourly chart of the USDJPY pair, which the pair is testing as of writing. If the pair manages to break the trend line and settle below the same, then there is a chance that it might head towards the 100 hourly moving average. The mentioned moving average is sitting right around the 50% fib retracement level of the last move higher from the 104.68 low to 106.88 high. It is important that the momentum shifts in favour of the US dollar sellers, else the pair might not correct substantially in the short term. Any further losses might take the pair towards the 200 hourly moving average, which is currently sitting around the 105.31 level.

If the USDJPY pair fails to break the highlighted trend line, then on the upside, initial resistance can be seen around the recent high of 106.88. A break above the same might take the pair towards the 107.00-20 swing resistance zone.

Overall, selling with a break below the trend line might be a good option in the short term until the pair is trading below the 106.88 level.

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[team.ikofx]

EURUSD Heading Towards A Breakout

The Euro after trading as low as 1.2850 managed to gain bids against the US dollar, but it has failed to gain momentum towards the upside. However, the recent economic releases in the Euro zone showed signs of life, and as a result the EURUSD pair survived downside. The German and French CPI data were released yesterday during the London session, which came in line with the expectation. Today, the Spanish and Italian CPI will be released. If the outcome stays in line with the expectation, then there is a chance that the Euro might gain traction in the near term. Let’s see how the technicals are aligning on the shorter timeframe.

There is an important contracting triangle forming on the hourly chart of the EURUSD pair, which acted as a support and resistance on a number of times recently. On the upside, the triangle resistance can be seen around the 1.2950 level. However, the most important resistance is around the 38.2% fib retracement level of the last drop from the 1.3153 high to 1.2859 low. Currently, the pair is consolidating around the 100 hourly moving average, which is around the 1.2930 level. So, if the pair manages to break higher, then there is a possibility of a move towards the 1.3000-10 resistance area where the Euro sellers are likely to appear again. The hourly RSI is around the 50 mark. A close above the same might call for more gains in the near term.

Alternatively, if the pair fails to break higher and moves lower, then it will be interesting to see whether it could manage to hold the triangle support trend line or not.

Overall, staying on the sidelines might be a wise option in the short term until the pair either breaks higher or lower.

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[team.ikofx]

GBPUSD Might Close The Open Gap

The British pound finally managed to gain some ground against the US dollar during this past, as the optimism from the Bank of England helped the GBPUSD pair to trade higher. There are several important high-risk events lined up during this week for the GBPUSD pair, including the inflation data, retail sales figure and the UK employment report. All these events have the potential to cause swing moves in the pair. There is also the Scottish independence outcome pending on the 18th of this week. So, one might witness a lot of swing moves in the British pound only against the US dollar, but also against a few other currencies like the Euro and the Japanese yen.

There is a bearish trend line forming on the hourly chart of the GBPUSD pair. The pair as of now is heading towards the 1.6300-20 resistance area, which also coincides with the open gap. Moreover, this area is just around the highlighted bearish trend line, and slightly below the 50% fib retracement level of the last fall from the 1.6643 high to 1.6051 low. So, there is a chance that the GBPUSD pair might spike higher from the current or a bit lower levels towards the mentioned resistance zone. It might close the open gap and then continue heading lower. Only a break and close above the 1.6340 level might call for a move towards the 1.6420 level.

On the downside, initial support can be seen around the 100 hourly moving average which is just below the 1.6200 support area. So, a lot of buying interest might occur around the mentioned levels.

Overall, selling rallies looks like a nice option as long as the pair is trading below the highlighted trend line.

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[team.ikofx]

AUDUSD Might Correct Higher In Short Term

The Australian dollar was recently crushed not only against the US dollar, but also against the Euro and the British pound. The AUDUSD pair broke the 0.9100 support area to challenge the all-important 0.90 area. The central banks were reported to be behind the selling of the Australian dollar. Moreover, the recent economic releases in the US were also on the positive side. One of the examples was the NY fed manufacturing index, which registered a massive gain of 27.54, beating the forecast by a fair margin as the market was expecting a reading of 16.00. This boosted the US dollar in the short term, but somehow the Aussie dollar managed to hold the ground yesterday.

The AUDUSD pair opened this week with a gap lower, but the pair found buyers around the 0.90 support area yesterday and jumped higher. The pair managed to close the opening week gap. Moreover, there was a bearish trend line on the hourly chart, which was broken during the NY session. Currently, the pair is trading around the 23.6% fib retracement level of the last drop from the 0.9217 high to 0.8990 low. There is a chance that the pair might consolidate for some time around the 0.9040-50 levels, and then test another bearish trend line. Considering the oversold readings, there is a possibility that the pair might break the highlighted trend line and challenge the 50% fib retracement level in the short term.

Alternatively, if the pair moves lower from the current levels, then initial support is around the 0.9020 level, followed by the yesterday’s low of 0.8990.

Overall, staying on the sidelines might be a wise option until the pair settles above the 100 hourly moving average.

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[team.ikofx]

Euro Around Critical Support Against British Pound

There were a few choppy moves seen in the $EURGBP pair recently, as both the Euro and the British pound traded awkwardly in the past few days. The pair broke an important resistance to trade above the 0.8050 level recently, but failed to capitalize on the same, and currently heading lower. There are several support levels on the way down for the pair, which might protect the downside. However, the pair is currently sitting around an important support area of 0.7960, which holds the key for more downside in the near term. There are several economic releases in the Euro zone and the UK today, which might act as a catalyst for the pair in the short term.

There is a monster bullish trend line on the 4 hour chart of the EURGBP pair, which might continue to protect downside in the pair. More importantly, the 100 and 200 moving averages are also around the same area along with the 50% fib retracement level of the last move higher from the 0.7892 low to 0.8065 high. So, there is a high probability that the pair might bounce from the current or a bit lower levels. On the upside, the 0.7980 is an immediate resistance, followed by the 0.80 handle. The 4H RSI has just closed below the 50 mark, which is not a good sign for the Euro bulls in the near term.

Alternatively, if the EURGBP pair fails to hold the highlighted bullish trend line, then a break might take the pair towards the last swing low of 0.7892.

One might consider a small risk buy around the 0.7960 level as long as the pair stays above the highlighted trend line.

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[team.ikofx]

USDJPY Blasts Higher Post Fed Rate Decision

The US dollar blasted higher against most major currencies, including the Euro and the Japanese yen. The USDJPY pair jumped higher and broke an important resistance area to trade above the 108.00 level. The pair traded as high as 108.67, and it looks like that it might continue surging after a minor correction. The fed interest rate decision was mostly as expected, but more on the hawkish side which boosted the US dollar across the board. The Japanese yen was one of the worst performers against the US dollar and fell more than 100 pips. Let us analyse the charts and see what can be the next possible move in the pair.

There was an important bearish trend line on the hourly chart of the USDJPY pair, which was broken just ahead of the fed announcement. Later, the pair retested the same trend line which acted as a support for the pair for a move higher. The pair is now correcting a bit lower, and might head towards the 23.6% fib retracement level of the last move higher from the 106.81 low to 108.67 high. If this happens, then there is a chance that the pair might find buyers around the 108.30-20 levels. Any further downside momentum might take the pair towards the 38.2% fib level. More losses in that situation are less likely considering the current market sentiment.

Alternatively, if the USDJPY pair moves higher from the current levels, then the recent high of 108.67 might come into play. A break above might call for a test of the 109.00 level.

Overall, buying dips look like a nice option, but one must avoid chasing this pair higher as the technical indicators are around extreme levels.

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[team.ikofx]

EURUSD Heading Lower Again?

Yesterday, the Euro managed to survive downside and found buyers around the 1.2850-60 support area and traded back higher. There were a few economic releases during the NY session, which missed the expectations and ignited a profit booking move in the US dollar. The EURUSD pair traded towards the 1.2920-30 resistance zone, but failed to overtake the same. This failure can be seen as crucial, and might ignite one more leg lower in the pair moving ahead. There is no major economic release in the Euro zone and the US. So, the market might range traded for some time before heading into a particular direction.

As mentioned that the EURUSD pair failed around the 1.2920 resistance area, as it represents a major confluence zone. The 100 hourly moving average, 200 hourly moving average, and the 61.8% fib retracement level of the last drop from the 1.2978 high to 1.2834 low are sitting around the mentioned area. The Euro buyers clearly struggled around the same, and it looks like that the pair might head lower in the near term. However, there is one positive note from the charts i.e. the hourly RSI is still above the 50 level, which might hold the downside for now. If the pair trades higher from the current levels, then the same resistance zone might come into play again. Any further gains could take the pair towards the broken trend line around the 1.2940-50 area.

On the downside, the 1.2880 level can be seen as a support, followed by the all-important 1.2850-40 area. Let us see how the pair trades in the coming sessions.

Overall, selling around the highlighted resistance zone might be considered as long as the pair is below the 1.2980 level.

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[team.ikofx]

GBPUSD Firm Around 1.6280, Eyes Gain

The British pound finally survived more downside around the 1.6280-90 levels against the US dollar, after surging towards the 1.6525 level after the Scottish outcome. The mentioned support area holds a lot of importance for the GBPUSD pair, as a break below the same might put the pair back into the bearish zone, which could take it lower in the coming days. There is hardly any major economic release during the London session, so there might be ranging moves. However, the US existing home sales data will be released during the NY session, which can cause some moves in the GBPUSD pair.

There is a critical bullish trend line on the hourly chart of the GBPUSD pair, which recently held the downside in the pair. Currently, the pair is testing the 23.6% fib retracement level of the last drop from the 1.6524 high to 1.6285 low. There is a chance of a break above the same and a push towards the 38.2% fib level where sellers might appear in the short term. The pair might dive one more time to retest the highlighted bullish trend line. The most important thing to note from the charts is that the same trend line is coinciding with the 100 hourly simple moving average. So, the 1.6280-90 area is very crucial in the near term.

If the highlighted trend line fails to hold, then a move towards the 200 hourly moving average is possible, where the British pound buyers might put up a fight. A break below might be a bearish call in the pair moving ahead.

Overall, buying dips are favoured as long as the pair is trading above the 1.6280 level.

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[team.ikofx]

AUDUSD Crushed As Sellers Take It Below 0.8900

The Australian dollar was recently hammered by the US dollar, as the AUDUSD pair is in a downtrend for the last couple of weeks. The pair yesterday broke the 0.8900 support area, which was a critical area. It looks like the Aussie dollar sellers are not willing to give up at any cost. The Chinese HSBC manufacturing PMI was released about an hour ago during the Asian session. The market was expecting it to fall from 50.2 to 50.0. However, the outcome was on the positive side, as the Chinese HSBC manufacturing PMI came in at 50.5. This might encourage the AUDUSD pair buyers to take it a bit higher from the current levels.

There was a critical triangle formed on the daily chart of the AUDUSD pair, which was breached recently. This break was very crucial, as it ignited a sharp down move in the pair. Currently, the pair is testing the 76.4% fib retracement level of the last leg from the 0.8659 low to 0.9504 high. So, there is a small chance of a pullback, but the overall trend is still bearish. The daily RSI is around the extreme levels which encourage the view of a short-term correction. The broken support area around the 0.9000-80 area might act as a resistance if the pair climbs from the current levels.

Alternatively, if the pair fails to correct higher from the current levels, then a break below the 76.4% fib level might ignite a move towards the last low of 0.8659. It would be interesting to see how the Aussie dollar buyers react around the mentioned level if reached.

Overall, selling rallies might be preferred, as the trend is very bearish which could take it towards the 0.8800 level at least.

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[team.ikofx]

Selling Rallies Preferred In EURGBP

The Euro was recently crushed against the British pound, as the EURGBP pair traded close to the 0.7800 support area. The pair managed to hold the mentioned area, and corrected higher. However, it remains under bearish pressure unless some signs of reversal emerge on the higher timeframes. There is a an important economic release lined up during the London session in the Euro zone i.e. the German IFO business climate index will be released. The market is not expecting any substantial change from the previous reading, but if we do get one, then there is a chance of swing moves in the Euro moving ahead.

Yesterday, the EURGBP pair failed right around the 100 simple moving average on the hour chart, and currently trading close to a bullish trend line. The mentioned trend line must hold if the Euro buyers have to take the pair higher in the short term. A break and close below the trend line might call for a retest of the last low. In that situation, there is a possibility that the pair might even break the 0.7800 support area and create a new low. The hourly RSI is well below the 50 level, which suggests that the Euro sellers are here to stay and more downsides cannot be denied in the near term.

Alternatively, if the EURGBP pair manages to bounce from the current levels, then a move close to the 100 moving average is likely. The Euro buyers need to take the pair above the 0.7880 level for more gains in the short term.

Overall, selling rallies should be preferred as long as the pair is trading below the 100 hourly moving average.

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[team.ikofx]

US Dollar Grinds Higher, More Gains Favored

The US dollar jumped higher against a basket of currencies, including the Euro, Swiss franc and the Japanese yen. The main reason behind the rise was the US new home sales report, which mentioned that the US new home sales gained by 18%, which was way higher than the market’s expectation. This ignited a sharp upside in the US dollar. The USDJPY pair also blasted higher and traded close to the 109.35 level. It broke an important resistance area, which might turn into a support in the short term. In the near term, more gains are favored in the pair.

There was a bearish trend line on the hourly chart of the USDJPY pair, which was breached yesterday. Moreover, the 100 hourly moving average was also around the same area, so it was a double break. The pair traded as high as 109.33, and currently correcting lower. There is a chance that it might move towards the 50% fib retracement level of the last leg from the 108.25 low to 109.33 high, which now coincides with the 100 MA. So, the 108.80-70 area is a major support in the near term and if the pair moves closer to this, then there is a high probability that the US dollar buyers might appear again. There is a divergence on the one hour chart which could push the pair towards the mentioned support area.

On the other hand, if the pair bounces from the current or a bit lower levels, then it might face resistance around the 109.35-40 area. This level needs to give up in order for more gains in the near term.

Overall, buying around the 108.80 looks like a good deal as long as the pair is above the 100 MA.

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[team.ikofx]

EURUSD – 1.2800 Is A Swing Zone Moving Ahead

The Euro was dumped yesterday against the US dollar, as the EURUSD pair traded a few pips below the 1.2700 support area. Currently, the pair is correcting higher, but the upside might be limited considering the fact that there are several levels on the way up which acted as a support earlier and might act as a resistance moving ahead. The German GFK consumer climate index will be released during the London session, which is likely to act as a catalyst for the pair in the short term. The market is not expecting any major change from the last reading, so it would be interesting to see how the outcome shapes and affects the shared currency.

There is a major bearish trend line forming on the hourly chart of the EURUSD pair, which is stirring along with two key moving averages. As of writing, the hourly RSI is right around the 50 mark, and struggling to break it. If it succeeds in closing above, then the pair might head towards the 50% fib retracement level of the last drop from the 1.2895 high to 1.2697 low. The mentioned fib level also coincides with the 100 hourly moving average. So, the Euro buyers might struggle around the 1.2795-1.2810 levels. Any further gains might take the pair towards the highlighted bearish trend line in the short term.

On the other hand, if the pair moves lower again from the current levels, then it might head back towards the 1.2700 support area. Any further losses should be limited considering the oversold readings.

Overall, staying on the sidelines could be a wise option as there is a great chance that the pair might correct higher.

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[team.ikofx]

British Pound Losses Ground, Eyes Downside

The British pound traded lower against the US dollar during this past week, as the GBPUSD pair fell below the 1.6300 support area. The market sentiment remained in the favour of the US dollar, and as a result the pair never managed to recover or rise. The pair even broke an important support area, which might now result in a move lower moving ahead. There is no economic release scheduled during the London session in the UK. So, the GBPUSD pair might continue to trade according to the US dollar sentiment. The US dollar sentiment is bullish, so the pair might lose more in the coming sessions.

There was a bullish trend line on the hourly chart of the GBPUSD pair, which was breached earlier during this past week. The pair looks like heading towards the last swing low of 1.6160. If somehow the pair manages to recover ground, then it might find resistance around the broken trend line. Moreover, the 38.2% fib retracement level of the last drop from the 1.6413 high to 1.6210 low is sitting around the 1.6287 level. So, the mentioned level might act as a strong resistance in the short term, as it is also coinciding with the broken trend line. The hourly RSI is around the extreme levels, which increases chances of a recovery.

There is also a possibility that the GBPUSD pair might not correct higher from the current levels. In that situation, the pair might continue heading lower towards the 1.6160 support area. If the mentioned level does not hold, then the pair might fall closer to the 1.6020 level.

Overall, selling rallies around the broken trend line looks like a good option in the short term.

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Posted By IKOFX Technical Team: Online Forex Broker