Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.
The Pound Sterling started off the year in a seemingly erratic manner at first glance. However, a closer look will reveal that it has merely been moving within a pre-established trading channel on the daily timeframe (Charts posted below). The support line of this channel converges with significant weekly lows at 1.5330s, and, by virtue of channel-trading rules, dictates that a move to that level should be followed by a pullback towards the channel resistance at 1.5600s. My outlook for the coming week(s) is bearish, because although longs from 1.5300s appear to be a high-probability play, the overall picture is extremely bearish, and at some point, a breach of the mentioned trading channel will likely occur.
Price action during the coming week will be important in determining direction for this pair. After Friday’s close, the 1.5450 broken triangle support on the 4hr is the immediate level to watch to the upside for resistance. A close back inside would suggest tighter ranging as it prepares for a breakout. To the downside, after Friday’s 1.5374 low and December’s 1.5360 support, the channel support line at 1.5330 will be a major target for bears. If this level fails to hold, 1.5100 is the next logical point that will be targeted.
1.5100 represents an almost perfect convergence of long-term support from the down trendline stretching from November 2007 high at 2.1160, and a line connected from 1.3501 all-time low, to May 2010 low at 1.4227.
Also check out the previous post on the $US Index here
Have a great weekend!
Other useful blogs:
Forex Crunch: Weekly Outlook
The GeekKnows– Daily Commentary on Eurusd
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