Price dropped sharply today and deleted the last two day’s increase, failed once again to reach and retest a major dynamic resistance, signalling another leg lower in the upcoming period. Looks exhausted on the short term, so a further drop is favored, the greenback is driving the rate down as the USDX managed to rebound today and has recovered after the yesterday’s impressive sell-off.
The USDX found temporary support right above a dynamic obstacle and tries to rebound again, I’ve said in the last days that we’ll see an important upside movement if will stay above the 95.45 previous low and if will make an accumulation move.
A USDX’s increase will force the greenback to appreciate versus its rivals, we may have a Falling Wedge pattern on the dollar index, but needs to be validated.
The Cable goes down also because the United Kingdom data have come in worse than expected, the Manufacturing Production dropped by 0.2% in May, even if the traders have expected to see a 0.5% growth, while the Industrial Production decreased by 0.1%, the economists expected to see a 0.4% growth. Moreover the Goods Trade Balance dropped further, from -10.6B to -11.9B, more versus the -10.8B estimate, while the Construction Output dropped by 1.2%, despite that the estimate was 0.6% increase. The Halifax HPI dropped by 1.0% and disappointed as the specialists have expected to see a 0.2% growth.
You can see that the price failed once again to react and retest the upper median line (UML) of the major descending pitchfork and most likely wil approach and reach the 1.2798 static support in the upcoming hours. Support could be found also at the first warning line (wl1) of the ascending pitchfork, we’ll have a larger drop if the rate will make a valid breakdown below this level.
Has signalled an exhaustion after another failure to approach and reach the upside line of the ascending channel, right now is very important to see what will happen on the USDX because a larger increase will send the currency pair tumbling in the upcoming weeks.