In spite of the GBP/USD ranging over 100 pips yesterday, the pair, once again, ended the day with little change. Looking over to the daily chart, this caused the unit to form a clear-cut indecision candle. Indecision is not really something one want’s to see when price recently bounced from, what we’d consider, a daily buy zone: 1.2602/1.2698 (a daily area marked in pink). This zone is comprised of a daily support level coming in at 1.2673, a daily 61.8% Fib support at 1.2625 (taken from the low 1.2365) and a daily AB=CD (black arrows) 127.2/161.8% ext. completion point seen at 1.2602/1.2698 (drawn from the high 1.3047).
While the H4 candles appear to be trying to establish a support around the mid-level number 1.2750, let’s keep in mind that weekly price recently tagged the underside of resistance pegged at 1.2789. With this level having provided both support and resistance since mid-2016, this is not a barrier one should overlook.
Our suggestions: A difference of opinion is clearly being seen on the higher timeframes (see above). And, as we said in Thursday’s report, judging direction can be tricky in situations like this. For that reason, our team has concluded that remaining on the sidelines for the time being is probably the best position to adopt.
Data points to consider: US Housing data at 1.30pm, US Prelim UoM consumer sentiment at 3pm, FOMC member Kaplan speaks at 5.45pm GMT+1.