Welcome to another blog by AspireFX. Today we’ll be looking at the pound versus the US dollar. We’ll be doing a top down analysis on this pair focusing mainly on the technicals involved.
Looking on the daily time frame, we can see how pivotal 1.24500 level has been over the last few weeks as it has been acting as a major key level shown by the arrows. It provided resistance on two occasions, whilst having two false breakouts to the upside in between. More recently that level of resistance has turned into support after forming a new higher high at 1.27500. We have also rejected the 61.8 Fibonacci level forming a three pin pattern to the upside.
On the 4 hour time frame we can see more clearly how we have been making higher highs and higher lows by looking at the arrows which gives a more clear representation of structure. Since printing the high at 1.27900, we did break structure to the downside but once we rejected the major key level of 1.24500, we then printed a higher high and should now keep an eye out for a potential higher low.
On the 1 hour time frame, we can see how we broke structure back to the upside with a break and retest of the descending trend line. We then formed a double top at the new high which has taken us into an attractive intra-day level of 1.25400. Looking left, we can see a possible inverse head and shoulder pattern coming into play. With the 61.8 Fibonacci level lining up perfectly with the highlighted intra-day level, we could see a further push to the upside however if we break through the highlighted region, look out for the 78.6 for potential reversals.
Looking at the fundamentals, the UK’s Average Earnings index came out 1.3% lower than the previous months data as well as the Unemployment Rate remaining unchanged but looking at the 3M/3M Employment Change, there was an increase of 6 000 people employed. Looking at the latest data that has been released by the US, we had a huge spike in Retail Sales as well as the Core Retail Sales but Industrial Production came out 0.8% lower than expected. The main theme to take into account for this week was the Fed’s announcement to continue implementing monetary policy moving forward where they plan on buying $250 billion worth of corporate bonds which has caused a recovery in the US stock market but is in actual fact a negative in the long run for their economy. Keep an eye out for the UK’s Retail and Core Retail sales being released later in the week, as well as Philadelphia Fed Manufacturing Index.
With a few more news events coming into play this week, be extra careful when entering the market, remember to always use the correct risk management and as always, trade safe! Subscribe to our blog to receive these blog posts instantly.