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The US Bank holiday on Friday always meant that the market would battle for some direction and so the market teetered to a rather quiet close. The FX market is becoming increasingly dependent on fundamental or geo political factors to drive it, usually I would say that this would be a hindrance for technical traders, but it has allowed us to focus on only one or two pairs every day.
Almost all the pairs traded well below its average daily ranges, with exception of the GBPUSD which was surprisingly active on Friday. The 200 hour MA at 1.3215 was the major resistance to watch last week, we had a break to 1.3240 on Friday before the sellers started placing offers on mass. The move lower broker through the 100 hour MA at 1.3165 on it is way down to 1.3110. This 100 hour MA defines the level to watch today as 1.3165 could become resistance, the buyers and sellers may have a good tussle at 1.3110 this morning though, ultimately we are getting closer to where Brexit concerns are to getting more pertinent – especially as PM May comes under increasing pressure.
The EURUSD continues to eye that 1.1661 level, the market continues to watch the 1.1675 level with keen interest – this is the neckline of the head and shoulder formation, I got a suspicion that this is the week that could settle this move. Either the H&S trade will be spoilt and the pair will find support and trade higher, my viewpoint is that this patterns are generally reliable and that the sellers will prevail. A suspect that will get a break lower this week and that the 200 hour MA and 100 hour MA at 1.1620 and 1.1605 will become the next focus.
In the Zone
Important Economic Data out today
All Day CAD Bank Holiday
- There are only a few salient differences between the House and Senate tax reform, the House are expected to pass the bill by Thursday this week and so this could be the major market mover this week.