I’m seeing a textbook retracement setup on Cable ahead of the U.S. retail sales release!
Will support still hold?
But first, here are the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
New Zealand Business NZ manufacturing index up from 39.7 to 51.4
Japanese tertiary industry activity index fell by 1.7% vs. projected 0.6% dip
ECB policymaker Wunsch: Inflation jump is transitory
French final CPI down another 0.2% as expected
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.S. headline and core retail sales at 12:30 pm GMT
U.S. Empire State manufacturing index at 12:30 pm GMT
U.S. UoM preliminary consumer sentiment at 2:00 pm GMT
FOMC member Williams’ speech at 4:20 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: GBP/USD
Who’s ready to trade Uncle Sam’s retail sales report?
This simple retracement play on GBP/USD might be worth watching, as price is already dipping to the Fib levels.The 38.2% Fib seems to be holding so far, but a larger correction might still reach the 50% level that lines up with an area of interest.
If you’re hoping for a more conservative entry, the 61.8% Fib is right smack in line with the 100 SMA dynamic support, which adds to its strength as a floor.
If the U.S. reports much stronger than expected consumer spending numbers, though, the pair might crash through all these levels.
The 100 SMA is above the 200 SMA to hint that the uptrend is more likely to resume than to reverse. At the same time, Stochastic is already heading higher to show that buyers are regaining the upper hand.
If this keeps up, Cable could bounce back to the swing high at 1.3735 or higher!