Forex News: Ranging Phase is Approaching an End. Prepare for Strong Breakouts
Forex News: The choppiness continued yesterday and the pair drifted generally sideways. This was mostly due to a lackluster economic environment, without any important data releases.
After what appeared to be a break of 1.1575 support, the pair returned above the level and tested 1.1610 resistance where it turned down again. This type of behavior is characteristic to a ranging market where price bounces between support and resistance without clear direction. Until we get a clean breakout, our bias is mostly neutral, although slightly bearish as long as price is trading below the 50 period EMA.
At 10:00 am GMT the European Commission will reveal their Economic Forecasts for the next 2 years. The release is not known to create huge market volatility but if it’s more hawkish than expected, it generally boosts the Euro.
On the US Dollar’s side we have the Unemployment Claims, an indicator that shows how many people asked for unemployment related benefits during the last week. The time of release 1:30 pm GMT and the expected number is 232K; values above expectations usually weaken the US Dollar but the impact is limited.
The pair took a bearish path yesterday after another attempt to move above 1.3160 resistance. The economic scene was calm, without any market moving releases.
Price is facing again the support at 1.3100 and this time we expect to see a break, followed by a move into 1.3030 and possibly 1.3000. We base this prediction mostly on the fact that the bulls tried to break 1.3160 twice and the pair created a double top just above the level, which is a sign that the buyers lack strength and that bearish pressure is increasing.
The National Institute of Economic and Social Research (NIESR) will release at 1:00 pm GMT an Estimate of the British Gross Domestic Product. The release usually has a low impact but considering the lack of major economic data this week, we may see a higher effect that usual. The previous estimate was 0.4% and numbers above it can strengthen the Pound.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.