GBP/USD at leg D of Cypher ahead of US durable orders release

Resistance – 1.4708, 1.4740, 1.4770

Support – 1.4684, 1.4636, 1.46

• Pair ran out of steam at a high of 1.4740 earlier today, following which a drop to 1.4677 was seen. The pair is now trading around 1.4708 levels, which is the leg D of the Cypher pattern drawn on the daily chart.
  

• Note the Leg D in the Cypher Pattern is where offers are expected to come-in.
  

• The hourly chart also suggests a bearish price RSI divergence has been formed, thus making 1.4740 a strong resistance.
  

Focus on US durable goods data

US durable goods orders data is scheduled for release today. Corporate spending is expected to have slowed down in April. The focus is likely to be on capital goods non defense ex aircraft orders, which if strong could overshadow even a weak headline figure and lend support to the US dollar.

Note that June rate hike bets stand around 38% and could near 50% if the durable goods figure is strong. That would also trigger speculation of hawkish comments from Fed’s Yellen tomorrow.

• Thus, a strong durable goods data could push GBP/USD pair lower towards 1.4636 given 1.4708 is leg D of cipher pattern + there is bearish price RSI divergence on the hourly.
  

• Moreover, a weak day end closing could add credence to Cypher pattern and signal weakness ahead.
  

• On the other hand, a horribly weak durable goods report could see the pair take out 1.4740, and move towards 1.4770 levels.
  

• Bulls need to take out 1.48 on day end closing basis as that would signal bullish inverted head and shoulder breakout.