The cable had a rough go at it on Thursday as the risk appetite of traders around the world soured. The concerns of global slowdown seemed to be validated as the Chinese, Americans, and Germans all posted bad economic numbers during the session. This of course facilitated a run to the US dollar, and this pair wouldn’t have been any different. Also, there is a lot of talk about downgrades of British banks, so the Pound will suffer as a result.
The 1.57 level has been on e that has attracted a lot of buyers and sellers, and this action will have not been a big surprise for many people. Having said that, the three candles – two hammers and one doji – seemed to suggest that we could see an attempt at further gains in this market. The fact that we fell anyway of course is a very bearish turn of events.
None the less, the 1.56 level held up as support by the end of the session, and the market seems content in this zone. Because of this, I think that any moves to the downside will be of the choppy variety, although this shouldn’t necessarily deter someone from selling if the right signal appears.
Supportive cluster at 1.56
The supportive action at 1.56 isn’t a big surprise, after all there is a big cluster of action in the area, and the region will have a lot of buyers in it. In order to get below it, we sustained bad news, something that shouldn’t be hard to find. The candle for the Thursday session was indeed very weak looking, so I suspect that this pair will eventually fall in the end.
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The 1.57 level will have to be watched now, as the zone should produce resistance if the sell side is to pick up steam. Because of this, I think the weekly charts are going to be a clearer picture of what is actually going on in this pair. I will wait until the Friday close to see if the 1.57 level held as resistance, got broken, or even what the weekly candle looks like. However, if we have a global slowdown – this pair will fall.