The Sterling reached 1.6383 per dollar as the market went for stops just beyond the 12-month high of 1.6379. In “GBPUSD Trading Towards a Triple Top,” the 12-month, confirmed supply zone is holding as price action quickly dropped to 1.6361.
The 4H chart shows small resistance at 1.6366, and a pullback to 1.6325 is likely before potentially making another drive up to the recently made highs.
Traders continue to be bullish after the Bank of England (BoE) Mark Carney cut the credit-lending program as mortgage approvals meet multi-year highs. Some analysts believe the excessive demand for homes is a sign the economy is growing, but the real reason Carney did so what to stop a bubble from happened. Only five years ago, and the market has already forgot what happen during the last asset bubble.
Technicals suggest a small pull back near-term. If price remains within the supply zone, the more likely a larger pullback will happen. The RSI is still encouraging given the large rise in the GBPUSD at 67, but it is quickly heading to the overbought reading.
A larger pull back could bring price action to 1.6238.
The euro has been higher against the greenback on general dollar weakness, but price action faded. The eurozone unemployment ticked down to 12.1 percent, but that is still incredible high. German retail sales also came in much lower than expected.
However, the eurodollar seem to have lost its mojo. After breaking the ascending channel, the euro’s price action as failed to break above the channel’s former support, now resistance.
Interestingly enough, the low made by the EURUSD on the beak of the channel has created a wedge pattern, and EURUSD broke it. Price action is currently supported by the 20 EMA, but a break lower and price action will target 1.3530.
The eurodollar has traded higher on the weaker dollar, but it is still evident that not all is well in the euro-bloc. Price action may trade to 1.350 prior to the 200 EMA.