Daily Market Report – GBP/USD Holding The Minor Gains August 17, 2016

GBP/USD Needs A Spark

Price decreased today and tries to resume the downside movement. Technically was somehow expected to decrease in the upcoming period, but the fundamental factors have taken the lead in the yesterday’s session. Stays much below the 1.3000 psychological level, signaling that the bears are still in the game.

GBP/USD decreased today as the USDX has managed to delete the morning losses and to climb above 93.81 static resistance. I’ll repeat myself, but only a valid breakout above the 93.81 level will confirm a larger rebound on the USDX.

You should be careful later as the United States data may bring a high volatility, the figures will shake the markets. The Unemployment Claims are expected to drop from 244K to 240K in the previous week, while the Capacity Utilization Rate could be reported at 76.7%, above the 76.6% in the previous reporting period. The Industrial Production could increase as well, by 0.3%, the greenback will be boosted by better economic numbers.

Price is challenging the upper median line (UML) of the major descending pitchfork. We had only a false breakdown on Tuesday because it is located above this major dynamic support. Was expected to drop after the breakdown below the warning line (wl1) of the minor ascending pitchfork.

I’ve said in the previous analysis that only a valid breakdown below the UML and below the 1.2798 static support will confirm a larger drop in the upcoming weeks. Price could increase again if the mentioned support levels will hold and will reject it.

EUR/JPY Melting Down

Price goes down as expected, I’ve said that we may have another leg lower after the minor rebound. Has come to retest the upper median line (UML) and the red uptrend line, but failed to retest the median line (ml) of the black ascending pitchfork and the upper median line of the minor descending pitchfork, signaling a decrease.

However, we need a confirmation that we’ll have a broader drop in the upcoming weeks, only a valid breakdown below the 38.2% retracement level will validate it.

USD/JPY Undecided

USD/JPY dropped in the morning and retested the red uptrend line and now has squeezed again. Needs a bullish spark to be able to increase further. We may have a bullish momentum if the US data will impress later. Hovers above the 110.00 psychological level, the next upside targets will be at the 38.2% retracement level and higher at the third warning line (WL3).

By Olimpiu Tuns

Market Analyst

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