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Daily Forex Technical Report − Focus on BoE Minutes and Canadian Retail Sales

Wed, Aug 20 2008, 08:17 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Focus on BoE Minutes and Canadian Retail Sales

Dollar retreats mildly overnight on recovery in the commodity markets. However, outlook in the forex markets is rather mixed for the moment. On the one hand, in addition to USD/CAD, USD/CHF and USD/JPY should have confirmed a short term top. However, price actions in AUD/USD and GBP/USD argues that they're just in sideway consolidation only. The rebound in EUR/USD is not yet strong enough to confirm a short term bottom too. At this point, markets could still flip either way until outlook in all major pairs align back together.

Focus in the European session will mainly be on BoE minutes of Aug meeting. Opinions in the board were mixed in Jul with 7 members voted for no change, Besley voted for a hike and Blanchflower voted for a cut. The situation is expected to be the same in Aug and markets expected the vote split to be 1-7-1 again given the worsening in both inflation and growth. Though, further division could be seen and a surprised voting of either side will likely rock the Sterling.

Another focus today will be Canadian retail sales which is expected to show 0.4% growth in Jun, with ex-auto sales climbing 0.6%. USD/CAD is so far still bounded in consolidation that started at 1.0727 and will need a surprise today to trigger a breakout.

More Technical Analysis Reports Here

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.8577; (P) 1.8627; (R1) 1.8719; More

Cable continues to be bounded in choppy sideway trading above 1.8515 today and outlook remains unchanged. Consolidation should still be relatively brief as long as 1.0878 minor resistance holds and below 1.8515 will indicate that recent decline has resumed for next target of 100% projection of 2.1161 to 1.9337 from 2.0158 at 1.8360. However, above 1.8787 will indicate that a short term bottom is in place with bullish divergence condition in 4 hours MACD and RSI. Stronger rebound should then be seen to 38.2% retracement of 2.0158 to 1.8515 at 1.9413. Though, upside should be limited below 1.9541 resistance and bring fall resumption.

In the bigger picture, medium term fall from 2.1161 (07 high) is still in progress. The developments so far are arguing that whole multi year up trend from 1.3680 (01 low) has also completed too. Those developments include strong break of the long term trend line and 55 months EMA, bearish divergence conditions and trend breaking in monthly MACD and RSI.

Focus is now on cluster support at 1.8303/60 (100% projection of 2.1161 to 1.9337 from 2.0158 at 1.8360 and 38.2% retracement of 1.3680 to 2.1161 at 1.8303). Sustained break of which will indicate that whole decline from 2.1161 is probably impulsive in nature and add more credence to the case of long term reversal. This will pave the way to next key support at 1.7047 first. On the upside, while strong rebound might be seen, a break of 2.0158 resistance is still needed to indicate fall from 2.1161 has completed. Otherwise, another fall should still be seen after correction.

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Published on  Wed, Aug 20 2008, 08:22 GMT