• The dollar was higher against the euro on Friday but lower versus other major currencies. US GDP rose at a 2.4% annualized pace in Q2 2010. While Q1 GDP was revised higher, estimates back to 2007 were revised lower. The S&P 500 increased 0.07 to 1,101.60. The euro fell from yesterday’s nearly 3-month high. Sterling traded at $1.5689 today, compared with $1.5612 yesterday. The Swiss franc gained for a third consecutive day against the euro and hit the highest level in a week. The Canadian and Australian dollars advanced against the greenback. The Reserve Bank of Australia is expected to maintain its key interest rate at 4.50% next week.
• The USD/JPY fell for a third straight day on carry-trade unwinding and weak Japanese economic data. Japan’s industrial production unexpectedly fell, jobless rate increased and consumer prices declined in annual terms for a 16th successive month. The pair fell to the lowest level since November 2009. If the 86-area support is broken, the USD/JPY will probably fall to the lower trading band in the 85 area.

Financial and Economic News and Comments

US & Canada

• US GDP grew at a 2.4% annualized rate in Q2 2010, a fourth consecutive quarterly expansion and marginally less than forecast, after an upwardly revised 3.7% annualized pace in Q1 (previously reported 2.7%), according to the advance GDP estimate released by the Commerce Department. Q2 GDP rose 3.2% y/y. The largest positive contributors to Q2 GDP growth were business investment in equipment and software, personal consumption, and inventories, while the weakest component was net exports. Consumer spending increased at a 1.6% annualized pace in Q2 after a downwardly revised 1.9% annualized rate in Q1. The GDP price index advanced at a 1.8% annualized pace, following Q1’s downwardly revised 1.0% annualized rate.

• The US employment cost index increased as forecast a seasonally adjusted 0.5% q/q in Q2 2010 after a 0.6% q/q advance in Q1, according to data from the Labor Department. ECI growth quickened to 1.8% y/y nsa from Q1’s 1.7% y/y.
• The Thomson Reuters/University of Michigan final consumer sentiment index declined to a better-thanexpected 67.8 (vs. preliminarily reported 66.5) in July from 76.0 in June, indicating US consumer confidence fell to the lowest level since November 2009, the latest Thomson Reuters/University of Michigan surveys of consumers showed, compared with July 2009’s 66.0. The current economic conditions index decreased to 76.5 (vs. preliminarily reported 75.5) in July from 85.6 a month earlier. The consumer expectations index declined to 62.3 (vs. preliminarily reported 60.6) from June’s 69.8.
• The Chicago business barometer unexpectedly increased to 62.3 in July from 59.1 in June, indicating US business activity expanded beyond the 50 growth level for a 10th straight month and at a faster pace, according to the Chicago Report by Kingsbury International, Ltd. and the Institute for Supply Management – Chicago, Inc.
• Canada’s GDP increased 0.1% m/m to a seasonally adjusted C$1.23 trillion ($1.19 trillion) annual rate in May, the eighth gain in nine months, after stalling in April, figures from Statistics Canada showed. May GDP rose 3.8% y/y.

Europe

• The eurozone consumer-price inflation rate accelerated to 1.7% y/y in July, the fastest since November 2008, from 1.4% y/y in June, according to a flash CPI estimate released by Eurostat. However, monthly CPI fell 0.4% m/m in July, the first month-on-month fall since January.

• Eurozone unemployment was up a seasonally adjusted 6,000 m/m to 15.771 million in June, the sixth increase in seven months, a separate report from Eurostat showed. The seasonally adjusted unemployment rate held as expected at 10.0% for a fourth consecutive month in June, the highest since August 1998, compared with June 2009’s 9.5%.
• TGerman retail sales, adjusted for calendar and seasonal variations, fell a more-than-expected 0.9% m/m in June, the third fall in four months, after an upwardly revised 3.0% m/m May gain that was the most since January 2008, according to data from the Federal Statistical Office. Retail sales rose 3.1% y/y, following May’s revised 0.7% y/y decrease.
• The KOF Swiss economic barometer was at 2.23 in July, unchanged from a downwardly revised 2.23 in June and halting its upswing since May 2009, the Konjunkturforschungsstelle Swiss Institute for Business Cycle Research reported, asserting that Switzerland’s year-on-year economic growth rate will likely remain “correspondingly positive throughout the next few months.”
• The GfK NOP UK consumer confidence index declined to a slightly lower-than-expected -22 in July from -19 in June, indicating UK consumer sentiment slumped for a fifth consecutive month to an 11-month low, according to data from GfK NOP. Consumer sentiment about prospects for the UK economy in the next 12 months continued its decline, with the expectations gauge falling to -25 in July from -12 a month earlier.

Asia-Pacific

• The seasonally adjusted Nomura/JMMA manufacturing PMI declined to 52.8 in July from 53.9 in June, indicating the Japanese manufacturing sector expanded above the 50 growth level for a 13th straight month but at the slowest pace in four months, a PMI report released by Markit Economics showed.
• The seasonally adjusted Nomura/JMMA manufacturing PMI declined to 52.8 in July from 53.9 in June, indicating the Japanese manufacturing sector expanded above the 50 growth level for a 13th straight month but at the slowest pace in four months, a PMI report released by Markit Economics showed.
• Japan’s core consumer prices, which exclude fresh food, slipped 1.0% y/y in June, a 16th successive year-onyear decline but easing from a 1.2% y/y decrease in May, according to CPI data from the Statistics Bureau. The CPI excluding food and energy fell 1.5% y/y, following May’s record 1.6% y/y drop. Tokyo’s core CPI, a leading indicator for nationwide price trends, slid 1.3% y/y in July, matching June’s year-on-year decline.
• Japanese industrial production unexpectedly fell 1.5% m/m sa in June, the first fall in four months and the most in more than a year, after a 0.1% m/m increase in May, preliminary June IP data from the Ministry of Economy, Trade and Industry showed, with the IP index declining to 94.7 from May’s 96.1. June IP rose 17.0% y/y nsa, a seventh straight year-on-year rise but smaller than a 20.4% y/y May gain.

• The Japanese seasonally adjusted unemployment rate unexpectedly rose to 5.3% in June, a fourth consecutive monthly rise and a 7-month high, from 5.2% in May, according to data from the Statistics Bureau. The economy added 40,000 jobs from a month earlier, the first monthly gain in five months. The job-toapplicant ratio, a leading indicator of employment trends, increased to 0.52 in June, the highest level since March 2009, meaning there were 52 positions for every 100 candidates, compared with May’s 0.50.
• Japanese household spending unexpectedly increased 0.5% y/y in June, the first gain in three months, after a 0.7% y/y decline in May, a separate report from the Statistics Bureau showed.
• Australia’s private sector credit increased a slightly less-than-expected 0.2% m/m in June after a 0.5% m/m advance in May, data from the Reserve Bank of Australia showed. Private sector credit rose 2.8% y/y, following May’s 2.7% y/y rise.

FX Strategy Update

EUR/USD USD/JPY GBP/USD USD/CHF USD/CAD AUD/USD EUR/JPY Primary Trend Negative Neutral Negative Positive Negative Neutral Negative Secondary Trend Neutral Negative Positive Negative Neutral Positive Negative Outlook Neutral Neutral Neutral Neutral Positive Neutral Neutral Action None Long None None Long None None Current 1.3030 86.38 1.5689 1.0414 1.0280 0.9044 112.56 Start Position N/A 87.75 N/A N/A 1.0247 N/A N/A Objective N/A N/A N/A N/A N/A N/A N/A Stop N/A 85.75 N/A N/A 1.0075 N/A N/A Support 1.2950 86.00 1.5300 1.0400 1.0300 0.8750 107.50 1.2550 84.80 1.5000 1.0300 1.0200 0.8600 106.00 Resistance 1.3250 90.00 1.5700 1.0750 1.0600 0.9050 115.00 1.3500 92.00 1.6000 1.1000 1.0800 0.9250 120.00

Expert Market Commentaries, charts and information are provided by Hans Nilsson of Globicus International, Inc., a registered third party CTA, are intended for educational purposes only and do not constitute trading recommendations.

Past performance is not indicative of future results. Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. Please contact a registered trading advisor if you have any questions.

This report is intended solely for distribution to customers of Capital Market Services, LLC. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, LLC with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, LLC accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Globicus International, Inc.

©2004-2010 Globicus International, Inc. and Capital Market Services, LLC.

Preview: Next week’s calendar is a hodgepodge of data, but the main event–as it always is during the first week of the month–will be next Friday’s employment report. We will preview that and the other key releases including the ISM manufacturing and services managers purchasing indexes.

Nick Nasad
Nick Nasad focuses on the Forex markets from a fundamental perspective, closely monitoring fundamental releases while reporting and analyzing their results. He provides daily updates for CMS Forex’s interactive economic calendar, the Forex Capsule, commentaries for our monthly newsletters, and daily video recaps.

In today’s video we dissect the 2nd quarter GDP results and what it means for the US recovery. The economy grew a smaller than expected 2.4% annualized rate. We also cover the important releases to look out for next week.

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Weakness Stays with Greenback; Yen Might Start Sliding as Well

This week, The US dollar continued to lose ground to the euro, and pound, as well as to the JPY, which competes with the USD for risk-aversion-based flow. The commodity currencies such as AUD and CAD also gained on the greenback. Even gold, which has been declining is gaining again. It appears the dollar has slid across the board. The Japanese yen may also start getting pressured, but only early signals are given to this outlook. Let’s review the technical developments for this week.

EUR/USD Nears Last Resistance Zone for Bearish Outlook (Link)

USD/JPY Remains Bearish with Negative Reversal Signal

• Daily: The USD/JPY fell below its previous support near 86.40, and tested the 86.00 level.
• This came after a rally materializing after a bullish divergence. Because the rally did not reach the previous high near 89.00, the market is showing us a negative reversal. This is a signal when the price high is lower, but the RSI high is higher.
• The projection for this is shown in the chart to about 85.20.
• This is the support zone for the USD/JPY going back to Dec 2009. The timing of the USD/JPY hitting this support, and the EUR/USD hitting an important resistance zone, might give the USD some strength in the next couple of weeks.

GBP/USD Testing Important Resistance Zone

• Daily: The GBP/USD continues to be strong this week. There was a positive reversal spotted last week, and the market continues higher after reaching the projection.
• The RSI did not develope a bearish divergence, a sign of continuing strength.
• I did mention earlier this week that the market should be nearing resistance. The 200-period moving average (in gray), is being tested, and the market continues. It is not testing an important powerline/zone that starts at about 1.57 to 1.5870(61.8% retracement).
• My take is that the market is now ranging, but is overextended to the upside. However, if the market accelerates next week, and the RSI shoots into the overbought zone. I would reconsider.
• If the market finds topping action next week, I will become more confident of this scenario.
• Next couple of weeks appear to be very crucial as the market spends time considering direction from significant powerlines, pivots, resistance, support, whatever technicians call them.

USD/CAD Breaks Below Congestion Pattern

• Daily and 1H: There isn’t much to update on the USD/CAD, except that it indeed broke below the congestion pattern. The target remains the 1.02/1.0180 area, and possibly retest of the parity level.
• The RSI shows ranging momentum, so I would start looking for bottom action soon. The weakness in the USD appears to be bringing it to major supports across the board. Will this help the greenback bounce back?
• If so, I would anticipate sharp reversals, such as a strong rally for USD/CAD from 1.018 next week, back towards 1.04, where the moving averages reside.

EUR/GBP Euro Showing Weakness

• Daily and 4H: The EUR/GBP was seen last week to decline and be supported at 0.8250. This week, the market did indeed continue the decline, but is only showing more confirmation for this outlook today.
• Looking the 4H chart, we see that the latest candle is threatening to break below the 0.8320 area. It broke it, but has not confirmed yet, and the break has not been convincing.
• This does also breaks the SMA 200 in the 4H chart.
• I am interested in seeing the reaction near 0.8250, the 61.8% retracement level. If there is a rally that breaks above the 0.84 area, I am convinced of a continuation rally.
• However, I will be looking for topping action as early as 0.8320.
• Then, the next target for decline is the previous low near 0.81/0.8060.

AUD/USD Struggling to Reach 0.91

• Daily: Last week, I anticipated further rally in the AUD/USD towards the resistance zone around the 78.6% retracement area.
• This week, the market gave us a strong bearish signal, but has not followed through. Instead, the week ended rallying, and testing this week’s high just below 0.91.
• This may complete a 2-swing correction suggesting a bearish attempt following the completion.
• There is possibility of topping action, and a decline towards 0.8550 in the short-intermediate term.

GBP/JPY Breaking Above Congestion Pattern

• Daily: The GBP/JPY did finally break above the congestion pattern we have been stalking the past several weeks now. The break is strong and has impulse type internals. The last few days saw the GBP/JPY slide but this offers a throwback.
• If the market can rally to start next week, it can go towards 140.00, with 138.65 as first resistance.
• The RSI did break above 60 temporarily, but the momentum is not convincing of a bullish rally.
• There is only a slight bias to the upside due to the strength of the rally and the weakness of the subsequent decline. Also, Elliott Wave Principles suggest internals point to bullish scenarios as well in the short-term.
• Perhaps, the Japanese yen will also take a hit. The rally in EUR/JPY and GBP/JPY is more probable if the USD/JPY can find a bottom and rally.

Fan Yang
Currency Analyst
Commodity Trading Advisor
fyang@fxtimes.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

The unemployment rate for June unexpectedly rose to 5.3% from 5.2%. That is a seven-month high for the jobless rate. A second report showed that factory output – industrial production – was down 1.5% for the month. Economists had expected a small gain. Consumer prices continued to show negative annual rates. For the country the consumer price index excluding food declined 1% from a year before.

In one positive report household spending did rise 0.5% in June compared to a year ago, following a 0.7% year-over-year decline in May. Expectations had a drop of 0.9% y/y figure. That means consumers were more willing to spend, but if the economy weakens then consumers may cut back spending again.

Japan’s economy is expected to show growth slowing to an annual rate of 1.9% in the 2nd quarter, following a sharp 5% rise in the 1st quarter.

The data will increase worries about a slowdown and put pressure on the government for solutions. Recently the Prime Minister has talked more about consolidating Japan’s fiscal deficit than stimulative economic growth. There will be increased pressure on the Bank of Japan as well, perhaps in the form of proposals to buy long-term governmetn bonds and target infaltion of 2 to 3 percent.

EUR/USD Nears Last Resistance Zone for Bearish Outlook

• Daily: The EUR/USD rallied further this week and is going to enter an upper zone of resistance.
• If the market continues further but can find a top in the zone that starts at 1.3120 to 1.3250, it can still decline towards and even past the 1.1880 area.
• However, a breaks suggests continual rally towards 1.35 area.
• There is a bearish divergence developing. The slowdown in momentum can also be seen by looking for strong bullish candles. The strongest has waned each week.
• To confirm topping, I would like to see a strong day decline that can match and preferably be wider than the ATR.
• Another thing to monitor is the USD/JPY and USD/CHF. At the moment, the USD is very weak against these. If it is rallying, the chances for EUR/USD to find a top improves.
• Will increase monitoring of this pair next week.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

Breakdown of Today’s Report

Expectations had been for a 2.5-2.6% annualized rate, but the economy grew 2.4%. In the 1st quarter there was  strong upward revision showing the economy grew 3.7% – the final version for 1st quarter growth had this figure at 2.7%. The growth in the 1st quarter was driven primarily by a rebuilding of inventories.

Consumer spending, the key engine of the US economy as it makes up about two-thirds of GDP, rose by a moderate annualized rate of 1.6%, compared to 1.9% for the 1st quarter. With an unemployment rate at 9.5% it makes sense that this figure is weak right now.

Now, business spending on equipment and software continued its strong pace from the 1st quarter when it jumped 20.4%. In the second quarter, business investment was up 21.9%. Again, this highlights the contrast in the economy between high company profits and a persistently feeble jobs market which is keeping consumers at bay.

The trade gap also weighed on growth as the trade deficit widened to $425.9 billion in the 2nd quarter from $338.4 billion in the first. That subtracted 2.8 percentage points from growth. Imports were up 29%, while exports rose 10%.

Implication for Recovery and Fed

Last week, Fed Chairman Bernanke said that the economy’s outlook was “unusually uncertain”, and has stressed that it would be consumer and business spending that would have to take the reigns as government stimulus efforts fade. Also, central bank officials have already reiterated they plan to keep rates at near zero for an extended period, so unless there are some new programs that come out from the August 10th meeting of the FOMC, it’s unclear what the Fed can do at this point.

There is a growing concern that some type of support is necessary, as the threat of deflation is becoming more serious. Price data today showed the core personal consumption expenditure – a rate of underlying inflation which excludes food and energy prices and is closely watched by the Fed – increased by 1.1% from the previous quarter. That was the weakest since the 1st quarter of 2009 and lower than the 1.2% seen in the 1st quarter of 2010. In other words price pressures are heading in the opposite direction that policy makers would like.

Revisions

In the first quarter, the economy grew by 3.7%, revised up from an originally reported 2.7% increase, but as we mentioned the increase there was led by inventories. But, while 1st quarter growth was revised higher, growth estimates all the way back to the start of 2007 were revised lower. For instance the 4th quarter of 2009 saw growth of 5.0%, not 5.6%.

For all of 2009, the government said the U.S. economy contracted by 2.6%, compared to the previously estimated 2.4% decline. In the whole of 2008, GDP was flat, instead of rising 0.4% as previously estimated. In 2007, the world’s largest economy expanded by 1.9%, down from an originally reported 2.1% increase.

• The dollar fell versus its counterparts on Thursday. The 4-week moving average of US initial jobless claims decreased to the lowest level since May 8. The S&P 500 declined 4.60 to 1,101.53. The euro rose to $1.31 for the first time since May 4 as euro-area economic sentiment climbed to the highest level since March 2008. The yen strengthened to 86.79 against the dollar at 5:28 pm in NY, from 87.35 yesterday. The loonie rose against the greenback for the first time in three days on gains in oil and other commodities. The aussie also advanced.
• The dollar index broke the 82-handle support. To reverse its downtrend, the index needs to break the 83-area resistance. There is support in the 81 area.

Financial and Economic News and Comments

US & Canada

• US initial jobless claims in the week ending July 24 fell 11,000 to 457,000, in line with forecast, from the previous week’s upwardly revised 468,000, according to figures from the Labor Department. The 4-week moving average declined 4,500 to 452,500, the lowest level since May 8. Continuing claims in the week ending July 17 rose 81,000 to 4,565,000 from the preceding week’s downwardly revised 4,484,000. The 4-week moving average of those continuing claims fell 18,000 to 4,548,250. The insured unemployment rate for the week ending July 17 increased to 3.6% from the prior week’s 3.5%.

• Canada’s industrial product prices unexpectedly fell 0.9% m/m in June, the largest fall since May 2009, after an upwardly revised 0.4% m/m advance in May, data from Statistics Canada showed. The June IPPI increased 0.2% y/y, a second consecutive year-on-year gain. Raw materials prices unexpectedly slid 0.3% m/m in June, a second straight monthly slide, following a revised 7.3% m/m May decrease. The June RMPI edged down 0.1% y/y, the first year-on-year decline since November 2009.

Europe

• The eurozone economic sentiment index increased to a higher-than-expected 101.3 in July from an upwardly revised 99.0 in June, showing eurozone economic confidence improved for a second consecutive month to the highest level since March 2008, according to data from the European Commission. Consumer confidence increased to -14 in July from -17 in June; industrial confidence improved to -4 from -6; and confidence in the services sector advanced to 6 from 4. In a separate measure of business confidence released by the EC, the business climate indicator increased to 0.66 in July, a 16th straight monthly improvement, from an upwardly revised 0.40 in June.

• Germany’s unemployment fell as forecast a seasonally adjusted 20,000 in July, a 13th straight monthly decline, to 3.21 million, the lowest since November 2008, after falling a revised 20,000 in June, data from the Federal Labor Agency showed, suggesting the German labor market continues to improve amid a strengthening economy. The seasonally adjusted unemployment rate declined to 7.6% from June’s 7.7%.
• According to figures released by the Bank of England, total net lending to individuals increased by £0.6 billion ($0.94 billion) in June after a £1.1 billion rise in May. Net lending secured on dwellings was up by £0.7 billion, slightly below May’s downwardly revised £0.8 billion increase. Mortgage approvals declined to a lower-thanexpected 47,643 in June from a downwardly revised 49,461 in May. Consumer credit unexpectedly declined by £0.1 billion in June, compared with a £0.3 billion increase a month earlier.
• UK house prices fell a slightly-more-than-expected 0.5% m/m to an average of £169,347 ($264,325) in July, the first decline since February, after a downwardly revised 0.0% m/m in June, a report released by Nationwide Building Society showed. House prices rose 6.6% y/y, a 10th straight year-on-year rise but the smallest since December 2009, following June’s 8.7% y/y gain.

Asia-Pacific

• Japanese retail sales increased as forecast a seasonally adjusted 0.4% m/m in June, the fifth gain in six months, after a 2.0% m/m May decline that was the deepest in more than five years, according to data from the Ministry of Economy, Trade and Industry. Retail sales rose as expected 3.2% y/y to ¥11.004 trillion ($126.99 billion), a sixth successive year-on-year rise, following May’s upwardly revised 2.9% y/y advance. Sales at large-scale retail stores slid 3.0% y/y to ¥1.564 trillion in June, a 27th straight year-on-year slide, after a revised 3.9% y/y May decrease.

FX Strategy Update

Expert Market Commentaries, charts and information are provided by Hans Nilsson of Globicus International, Inc., a registered third party CTA, are intended for educational purposes only and do not constitute trading recommendations.

Past performance is not indicative of future results. Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. Please contact a registered trading advisor if you have any questions.

This report is intended solely for distribution to customers of Capital Market Services, LLC. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, LLC with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, LLC accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Globicus International, Inc.

©2004-2010 Globicus International, Inc. and Capital Market Services, LLC.

Expert Market Commentaries, charts and information are provided by Hans Nilsson of Globicus International, Inc., a registered third party CTA, are intended for educational purposes only and do not constitute trading recommendations.

Past performance is not indicative of future results. Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. Please contact a registered trading advisor if you have any questions.

This report is intended solely for distribution to customers of Capital Market Services, LLC. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, LLC with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, LLC accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Globicus International, Inc.

©2004-2010 Globicus International, Inc. and Capital Market Services, LLC.

GBP/USD Hits Positive Reversal Target

• Daily: In last Friday’s Weekly Technical Update, it was noted that the GBP/USD developed a positive reversal (when the RSI low is lower or equal, but the price low is higher). The swing projection to 1.5610 was projected. The market reached 1.5637 already.
• I mentioned that this pair now enters a zone of resistance above 1.56. You can see in the daily that this is the zone between 50 and 61.8% retracement.

• 1H: The GBP/USD in the 1H chart also shows a rally following a positive reversal. The projection to 1.5625 was reached. This came after a bearish divergence was formed.
• This suggests that the momentum has slowed, but the bearish attempts are in the near-term, and not strong enough to reverse the trend.
• Now we are pushing into resistance again. Some traders find this to be a scalping opportunity, but for the intermediate term, the rally is still intact, and there are no signs of reversal.
• However, being that the market is testing resistance, the resistance zone above 1.56 should be monitored for topping action.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.