Forex News: Retracements Finally Happening. Overall Bias Still Very Bullish
Forex News: The pair finally retraced lower during yesterday’s trading session after failing to break 1.2280 resistance. The move was mostly technical as no major economic data was released for either currency in the pair.
Several candles have shown long wicks on their upper part, piercing through 1.2280 and then retreating below the level. This is a clear sign that 1.2280 cannot be broken for the time being, so we expect the retracement started yesterday to extend below 1.2220, which is a minor support. A good place for upside movement to resume is somewhere around 1.2200 but if that barrier is broken, the pair will be headed into the 50 EMA.
The European Final Consumer Price Index will be released today at 10:00 am GMT, showing changes in the price paid by consumers for the goods and services they purchase. This is the main gauge of inflation but the Final version tends to have a lesser impact than the previous two versions; however, a higher change than the forecast 1.4% usually strengthens the Euro and takes the pair higher.
On the US Dollar side the only notable release will be the Industrial Production, scheduled at 2:15 pm GMT. The indicator has a low-to-medium impact and higher numbers than the forecast 0.3% have a positive influence on the greenback.
Yesterday the British CPI matched the market consensus so the release didn’t have a strong impact on the Pound and the pair finally moved lower after a long period of bullish action.
Price action created resistance at 1.3820 and the pair dropped into the minor support at 1.3745 but the Relative Strength Index and the Stochastic are still close to overbought levels so it is very possible to see a continuation of this retracement below 1.3745. The overall bias is still clearly bullish, so we expect a break of 1.3820 after the pullback is over.
The United Kingdom didn’t schedule any notable economic data releases for today so the technical aspect will decide the pair’s direction.
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.