GBP/USD REMAINS BELOW 1.3700 — TRADING IDEAS — DUKASCOPY BANK
During the late hours of Thursday’s trading, the GBP/USD made another failed attempt to pass the resistance of the 1.3700 level. The pair bounced off the resistance and by the middle of Friday’s trading the rate passed the support of the 55-hour simple moving average.
In the near term future, the rate was expected to look for support in technical resistance levels that were located from 1.3600 to 1.3620.
The week will end with the publication of the US Retail Sales and US Core Retail Sales at 13:30 GMT. In November and December, these data sets caused an increase of volatility above the average.
Next week, UK data releases start on Wednesday at 07:00 GMT. At that time, the UK Consumer Price Index is scheduled to be published. This event has caused GBP/USD moves from 9.7 to 22.2.
On Thursday, at 13:30 GMT, a minor move could be caused by the weekly US Unemployment Claims. This event has caused GBP/USD moves from 8.8 to 45.7 pips since December 17.
However, note that the 45.7 pip move in December 23 was an anomaly caused by other events not the Unemployment Claims. Without the 45.7 pips move, the range is 8.8 to 12.7 pips.
On Friday morning, at 07:00 GMT the UK Retail Sales could cause a move from 6.4 to 16.0 base points.
On the same day at 09:30 GMT, the UK Manufacturing and Services PMIs could cause a move from 13.0 to 18.7 pips.
The Friday would end with the US Manufacturing and Services PMIs at 14:45 GMT. The GBP/USD has moved from 7.8 to 35.5 pips on the release.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
GBP/USD short-term review
Given that the currency pair is pressured by the 55-hour moving average near 1.3660, it is likely that some downside potential could prevail in the market. The pair could target the 1.3550 level.
Meanwhile, note that the exchange rate could gain support from the 100– and 200-hour SMAs, as well the weekly PP in the 1.3610 area. If the given support holds, the rate could consolidate.
On the daily candle chart, it can be observed that previously the 1.3700 level strengthened the resistance of the large scale channel up pattern.
In regards to the future, due to the angle of the resistance of the pattern, the rate still has room for a surge. However, a decline to the 55- day SMA is likely, as the rate had done so each time after reaching the upper trend line.
On Thursday, 66% of trader open position volume on the Swiss Foreign Exchange was in short positions.
On Friday, the sentiment was 67% short.
Meanwhile, in the 100-pip range around the rate the pending orders were 62% to sell the GBP/USD pair. Previously, the orders were 66% to sell.