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

FX_IDC:GBPUSD   British Pound/U.S. Dollar
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.

  • 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.
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