Forex News: The Market Enters Consolidation Phase. Strong Breakouts on the Horizon
Forex News: The Final version of the European CPI was in line with expectations, posting a 1.4% change and the pair remained inside a range for most of yesterday’s session.
Price spiked above 1.2280 but immediately retraced below the level and dropped into the support at 1.2195. This type of behaviour means that the pair is likely to spend an extended period of time in a consolidation phase between 1.2195 and 1.2280 but once a clear breakout occurs, price will likely move in that direction for a longer period of time.
At 1:30 pm GMT the US Building Permits come out, showing how many permits were issued during the previous month. This is a good gauge of construction activity because getting a permit is the first step in starting a building and usually higher numbers strengthen the US Dollar but the impact is not always notable. Today’s forecast is 1.29 Million, very close to the previous 1.30 Million.
Similar to the EUR/USD, the Cable showed mixed movement yesterday and remained confined in a relatively small range after a failed attempt to break resistance.
The overall bias remains clearly bullish but it seems the pair is taking a breather and is consolidating between 1.3745 and 1.3820. Until a breakout occurs we expect to see choppy movement and once it does, the pair will extend into 1.3860 or the 50 period Exponential Moving Average, depending on the direction of the breakout.
The Pound will not be affected by major economic data today so the technical aspect will be the main price driver.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.