The new week starts with a big event, the Bank of England interest rate decision. As usual, we expect the interest rate to remain unchanged. Data on manufacturing production and industrial production are due on Tuesday's session. Major economic data, like BoE Governor Carney's speech, inflation report, and Claimant count, change fall on Wednesday. Besides, the US will publish figures for retail and core retail sales on Wednesday. Thursday and Friday are seen to be mute sessions in terms of economic data. We expect the BoE inflation data to be crucial.
Technical view: The cable enjoyed the biggest intraday spike in a month. The cable rejected at 1.5535 200Dema and made a high of 1.5522. In April 29, 2014, the pair edged lower to 1.5090 from a high of 1.5498. The strong parallel resistance zone is seen between 1.5535 161.8 FE and 1.5552. In case the price manages to stay above 1.5555, bulls can aim to gain another 100 pips on the higher side. The 200Dsma is seen at 1.5650. The cable managed to close above 20Wsma after 37 weeks. The 20Wsma is found at 1.5125. On the downside, support is found at 1.5230, 1.5140 100Dema, and 100Dsma respectively. The weekly trading pattern is framed between 1.5552 and 1.5140. Until the cable closes above 1.5000 50Dsma and the previous supply zone, the bullish view remains in play.
Intraday view: Intraday support is found at 1.5400 in the four-hour chart. The real problem for bulls will arise below 1.5350 to extend the downward journey towards 1.5300 and 1.5260 61.8 FE/1.5240 34hrsma. Intraday resistance is found at 1.5470 and 1.5485. Major resistance is seen at 1.5535 and 1.5552. We recommend buying above 1.5450 with small targets at 1.5470, 1.5485, 1.5500, 1.5530, and 1.5550. We can expect intraday strong momentum above 1.5485 and big spikes above 1.5552 towards 1.5600 and 1.5640. In the four-hour chart, mild negative divergence has been developing.
Trade: Sell below 1.5400, risk traders can buy above 1.5450 and safe traders can buy above 1.5485.
Key resistance levels to watch:
1.5520 double top-h4
1.5552 previous swing
Support: 1.5355 double bottom-h4
The material has been provided by InstaForex Company – www.instaforex.com