Wednesday observed a knee-jerk spike to lows of 1.2830 following the Bank of England (BoE) announcing a 50 bp rate cut ahead of the FTSE open. Though 1.29 survived the initial attack, UK budget proposals failed to provide any meaningful impetus. Leaving H4 resistance at 1.2981 unchallenged, a decisive move through 1.29 occurred, with the unit now poised to shake hands with 1.28, and March’s opening level at 1.2783. Recent selling also weighed on the relative strength index (RSI), seen closing in on oversold terrain.
Price action on the weekly timeframe saw long-standing trend line resistance, pencilled in from the high 1.5930, regain position this week. According to chart studies, the pair has scope to decline further, at least until crossing swords with the 2019 yearly opening level at 1.2739.
Daily Quasimodo support at 1.2849 failed to deliver much yesterday. Price is seen hovering south of the base, with eyes for support at 1.2769, a 127.2% Fibonacci extension at 1.2738 and the 200-day SMA (orange – 1.2703). Note this SMA is beginning to show signs of turning higher.
Daily Quasimodo support at 1.2849 recently caving in shines the spotlight on the area marked in green on the H4 between 1.2769/1.28. Made up of daily support at 1.2769, March’s opening level at 1.2783 and the 1.28 handle, this base may entice buyers today. The caveat, however, is a potential move to weekly support at 1.2739, which aligns with the 127.2% Fibonacci extension at 1.2738 on the daily timeframe. Therefore, waiting for additional bullish candlestick confirmation to form out of 1.2769/1.28 before pulling the trigger may be an idea worth exploring.
Disclaimer: The information contained in this material is intended for general advice only.