At the beginning of this week, the pair is correcting up after a significant fall at the start of the month. At the same time, the US Dollar continues receiving support amid growing expectations of monetary policy tightening by the Fed towards the end of the year.
The Pound, however, is supported by expectations of a large number of important macroeconomic statistics from the UK that, according to forecasts, will show growth in the indices. Today, data on consumer inflation is due. Due to a noticeable decline in the Pound, consumer prices are expected to accelerate their growth in September. On Wednesday, September report on the labour market is due while on Thursday Retail Sales are out. In addition, attention should be paid to data on the Chinese GDP for the third quarter of the year, due tomorrow.
Support and resistance
Bollinger Bands on the daily chart is moving down while the price range is narrowing from the bottom. MACD turned up having formed a buy signal. Stochastic is trying to turn down near the border of the oversold zone.
The indicators recommend waiting for clearer trading signals.
Support levels: 1.2132 (local low), 1.2088 (11 October low), 1.1889 (7 October low).
Resistance levels: 1.2272 (local high), 1.2325 (12 October high), 1.2400, 1.2476, 1.2650, 1.2719, 1.2796 (4 October high), 1.2850, 1.2900, 1.2945, 1.3000 (psychologically important level).
Trading tips
Short positions can be opened after the breakdown of the level of 1.2200 with targets at 1.2120, 1.1900 and stop-loss at 1.2230. Validity – 2-3 days.
Long positions can be opened after the price consolidation above the level of 1.2280 with targets at 1.2400, 1.2480 and stop-loss at 1.2240. Validity – 2-3 days.
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