Technical - Textbook confluence of noteworthy structural and technical indicators, and we should see downwards price action next week. Major resistance overhead @ 1.5520 takes us to February highs. divergence can be seen on with price action showing higher highs, but not keeping pace. And finally, Friday’s price action which appears to be shaping into a . It could be a little choppy as we are above the 50 day MA. However we should hit our target 1.5311, taken from the 23.6% Fib (Retracement) in the coming week.
Risk - Risk to reward is healthy on this one. Assuming a 100pip stop, risk/reward is at 2.46 for our target.
Fundamental (medium term) – Given that markets and the sterling reacted positively to the UK election result, movement beyond our 23.6% fib target and particularly beyond the 38.2% fib is not anticipated. Over ambitious US Interest rate hike expectations may see some cooling in the coming weeks. Should expectations cool, may resume and I have a medium term bias on this pairing. Following this trade, I foresee movement upwards to the 1.5740, which is major resistance as well as the 127.2% fib (extension).