8 Dec 2016

8 Dec 2016

It was a retracement for the pound yesterday. It did retrace to 1.26 before rebound back to 1.266, within the 0.382 and 0.236 level.

The fundamental of UK came from manufacturing production month to month, it fell below the 0.2% to a negative 1.2%. On the US, the price of crude fell to below $50. The price of crude oil is based on USD. If the price of crude is low, the USD is weakening.

Likewise, DOW and Nasdaq continue to have the Trump effect and continue to run high. A co relationship between DJIA and GUS/USD pair can be seen at this link . At this stage there is a positive relationship.

That explains the downward movement of the pound from around 1.27 the day before to a low of 1.26 during Europe trading hours, before moving up again to 1.266 during US trading hours.

Today, quiet from news on the UK front. But of course, PM May are coming out a plan for Brexit. Any speculative news release that is favorable for UK in the exit in negotiation with EU will bring a spike in the pound.

Else, it will be a wait for US unemployment claims. A better than expected result will push the cable in the other direction.

The pound has retrace to its 0.236 level at 1.266. Resistance is at 1.27. A strong support is presence at 1.26 by EMA55 as well as fib retracement level at 0.382.

CCI indicator offer a downside to the cable, which means a good short at 1.266 to 1.27 level. With WMA5 now above EMA55 and EMA21 converging with EMA55, now offer more reason for a strong support at 1.26.

I am expecting a price range of 1.27 to 1.26.