By Fast Brokers – The Cable is battling previous March highs set during Friday’s topside breakout. The Cable logged encouraging gains on Friday in the wake of stronger than expected U.S. retail sales data. The improvement in retail sales gave investor more confidence in the global economic recovery and this favored the risk trade. The Cable popped past our previous 1st tier downtrend line in the process, which could prove to be a key movement since our 1st tier ran through 2/23 highs, or the 1.5550 area. We recognized a similar technical breakout in the EUR/USD on Friday, and it will be interesting to see whether these two currency pairs can maintain their upward momentum, though a period of profit taking would not be surprising. Meanwhile, the Cable is distancing itself further from its psychological 1.50 level with near-term topside technical barriers wearing thin. The data wires will heat up as the week progresses, highlighted by the FOMC meeting in Tuesday. The UK will be relatively quiet until Wednesday’s release of the Claimant Count Change along with the BoE’s meeting minutes. Focus could remain on the U.S. today with the release of a data set including, Industrial Production, Capacity Utilization, TIC Long-Term Purchases, and the Empire Index. Investors should continue to keep an eye out for headlines concerning the parliamentary election or cautioning against UK debt levels, since these statements have rocked the Cable in the past. Therefore, potential for another negative shock for the Cable remains regardless of the currency pair’s present upward momentum.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday and 3/12 lows. As for the topside, the Cable faces multiple downtrend lines along with 3/15 and 2/26 highs. Our 1st-3rd downtrend lines gain importance since they run through 2/17 levels, or the 1.58 zone. Meanwhile, the psychological 1.50 area becomes a technical cushion should it be tested.
Present Price: 1.5180
Resistances: 1.5184, 1.5195, 1.5205, 1.5215, 1.5233, 1.5236
Supports: 1.5174, 1.5165, 1.5152, 1.5143, 1.5132, 1.5125
Psychological: 1.50 and March highs
(click chart to enlarge)
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