Tuesday, May 22, 2012
GBPUSD Analysis: CPI & Fibonaccis
UKCPI Figures are slated to be released today with the Bank of England than holding its Inflation Report shortly afterwards. With the GBPUSD falling below 1.6000 support to a low of 1.5725 last week we decided to take a closer look on potential moves the pair could make following the figures.
As you can see from the chart above, after an 100 pip or so bounce from its lows, the pair is currently seeing resistance at 1.5845. That could set the pair up for a potential breakout move higher if its current resistance is broken on any positive UK news today. However, gains could be limited if the initial momentum is unable to cause the GBPUSD to trade above 1.5880, its 38.2% Fibonacci resistance level from last week’s high to low. If 1.5880 is surpassed, there will be very little technical; wise to stop the pair from moving to 1.5925.
On the other hand, as the GBPUSD’s current bounce is still well clear of its 38.2% resistance level, any selling pressure could lead buyers to quickly back off and lead to a retest of last week’s lows.