On Friday, the Pound attempted to recover, and reached a 1-week hi @ 1.3889, before dropping again, and closing @ 1.3835, which is exactly equal to the open according to my chart. This price behavior has left behind a Doji candle, indicating that a possible reversal might follow, after recent recovery attempts.
Moreover, the 2 most recent recovery attempts has topped only pips above the Marji 71.4% retracement level @ 1.3875, which is another weakness sign. A 3rd sign that is not any less important is that The last 2 weekly highs are only 3 pips apart (1.3889, and before that 1.3892), which indicates that we have a stubborn resistance in this area that just is not giving up.
Combining all these 3 signs, we favor the downside for as long as our initial resistance, 1.3875, is not broken in a clear & clean way. The more time the price spends below this level, the more vulnerable it will become. A confirmation of the weakness could come in the form of penetrating the initial support 1.3827, which combines Friday’s lo, with a short-term Fibonacci level.
A break below 1.3827 should put bearish pressure on this pair, which could very much target yet another test of the rising trendline from August 20th short-term bottom. This trendline is currently running extremely close to Thursday’s lo 1.3754. This time, the attack on this trendline may dig below this trendline, seeking 1.3727 or even the important Marji retracement level @ 1.3685.
On the other hand, if the surprise happens & we break above 1.3875, then hoping for weakness from these levels will not be justified anymore. In this case, the price could push past the 1.39 landmark, and may march towards a very interesting target at 1.3991.
Support:
• 1.3827: Fibonacci 38.2% for the rising move from Wednesday’s lo 1.3727 to Friday’s hi 1.3889.
• 1.3789: Fibonacci 61.8% for the rising move from Wednesday’s lo 1.3727 to Friday’s hi 1.3889.
• 1.3754: Thursday’s lo, which is also extremely close to the rising trendline from August 20th short-term bottom.
• 1.3727: Wednesday’s lo.
• 1.3685: Marji 71.4% for the rising move from August 20th bottom 1.3602 to Friday’s hi 1.3889.
Resistance:
• 1.3875: Marji 71.4% for the falling move from July 30th top 1.3984 to August 20th bottom 1.3602.
• 1.3929: Marji 85.7% for the falling move from July 30th top 1.3984 to August 20th bottom 1.3602.
• 1.3991: Fibonacci 61.8% for the whole move from June 1st top 1.4250 to July 20th bottom 1.3572.
• 1.4056: Marji 71.4% for the whole move from June 1st top 1.4250 to July 20th bottom 1.3572.
• 1.4105: Fibonacci 78.6% for the whole move from June 1st top 1.4250 to July 20th bottom 1.3572.
Trend:
• Short-term: Down, as long as we are trading below 1.3875.
• Medium-term: Down, as long as we are trading below 1.4056.
• Long-term: Down, as long as we are trading below 1.4056.
Good Trading & Good Luck!
Munther T. Marji CMT
Moreover, the 2 most recent recovery attempts has topped only pips above the Marji 71.4% retracement level @ 1.3875, which is another weakness sign. A 3rd sign that is not any less important is that The last 2 weekly highs are only 3 pips apart (1.3889, and before that 1.3892), which indicates that we have a stubborn resistance in this area that just is not giving up.
Combining all these 3 signs, we favor the downside for as long as our initial resistance, 1.3875, is not broken in a clear & clean way. The more time the price spends below this level, the more vulnerable it will become. A confirmation of the weakness could come in the form of penetrating the initial support 1.3827, which combines Friday’s lo, with a short-term Fibonacci level.
A break below 1.3827 should put bearish pressure on this pair, which could very much target yet another test of the rising trendline from August 20th short-term bottom. This trendline is currently running extremely close to Thursday’s lo 1.3754. This time, the attack on this trendline may dig below this trendline, seeking 1.3727 or even the important Marji retracement level @ 1.3685.
On the other hand, if the surprise happens & we break above 1.3875, then hoping for weakness from these levels will not be justified anymore. In this case, the price could push past the 1.39 landmark, and may march towards a very interesting target at 1.3991.
Support:
• 1.3827: Fibonacci 38.2% for the rising move from Wednesday’s lo 1.3727 to Friday’s hi 1.3889.
• 1.3789: Fibonacci 61.8% for the rising move from Wednesday’s lo 1.3727 to Friday’s hi 1.3889.
• 1.3754: Thursday’s lo, which is also extremely close to the rising trendline from August 20th short-term bottom.
• 1.3727: Wednesday’s lo.
• 1.3685: Marji 71.4% for the rising move from August 20th bottom 1.3602 to Friday’s hi 1.3889.
Resistance:
• 1.3875: Marji 71.4% for the falling move from July 30th top 1.3984 to August 20th bottom 1.3602.
• 1.3929: Marji 85.7% for the falling move from July 30th top 1.3984 to August 20th bottom 1.3602.
• 1.3991: Fibonacci 61.8% for the whole move from June 1st top 1.4250 to July 20th bottom 1.3572.
• 1.4056: Marji 71.4% for the whole move from June 1st top 1.4250 to July 20th bottom 1.3572.
• 1.4105: Fibonacci 78.6% for the whole move from June 1st top 1.4250 to July 20th bottom 1.3572.
Trend:
• Short-term: Down, as long as we are trading below 1.3875.
• Medium-term: Down, as long as we are trading below 1.4056.
• Long-term: Down, as long as we are trading below 1.4056.
Good Trading & Good Luck!
Munther T. Marji CMT