Today's Technical Report/Commentary:
The recovery faced problems late last week topping extremely close to the short term Fibonacci 38.2% level at 1.6275. A look at the attached chart illustrates that this level is also very close to the bottom of the previous falling trend channel. This will be our resistance for today.
If the Pound is to continue recovering from 1.6250 it must break above this level, the sooner the better. Failure at this level will most probably be followed by another drop to a new multi-month low, and may be a test of the key Fibonacci level at 1.6001. The support which will indicate weakness in case it is broken is the current daily low 1.6228. A break of either 1.6276 or 1.6228 should give us more clues on the short term position of the Pound.
If 1.6276 gives way, the rising correction from 1.6050 will continue. First target for this break would be 1.6327, which will fill the gap seen last week. Above here we have the rest of the short term Fibonacci retracements at 1.6346, 1.6416 & 1.6473. A break above the latter is unlikely for now, but in case it actually happens, the first target for such an important break would be 1.6620.
On the other hand, it 1.6228 gives way, then chances are that we have seen an important top at Thursday’s high, from which we will drop to test 1.6001. The first target for breaking 1.6228 would be 1.6189, followed 1.6163, 1.6136 & the important 1.6114. A break below 1.6114 would confirm that the price is targeting a test of 1.6001.
Aside from the technical, the Pound’s great event this week is the Scottish independence referendum, which is due this Thursday. This event is expected to influence trading the Pound all through this week. Caution is advised.
Support:
• 1.6228: today’s current daily low at the time of preparing this report, which is also pips above the rising trend line from Thursday’s low.
• 1.6189: micro term Fibonacci 38.2% retracement calculated for the rising move from September 10th 10-month low 1.6050 to Friday’s daily high & probable Fibonacci top 1.6275.
• 1.6163: micro term Fibonacci 50% retracement calculated for the rising move from September 10th 10-month low 1.6050 to Friday’s daily high & probable Fibonacci top 1.6275.
• 1.6136: micro term Fibonacci 61.8% retracement calculated for the rising move from September 10th 10-month low 1.6050 to Friday’s daily high & probable Fibonacci top 1.6275.
• 1.6114: micro term Fibonacci 71.4% retracement calculated for the rising move from September 10th 10-month low 1.6050 to Friday’s daily high & probable Fibonacci top 1.6275.
• 1.6050: September 10th 10-month low.
• 1.6001: long term Fibonacci 50% calculated for whole enormous move from 2013 yearly low 1.4812 to July’s 6-year high 1.7190.
• 1.5954: September 23rd 2013 daily low & short term bottom.
• 1.5902/21: a well-known support area which includes several daily lows from October & November 2013.
Resistance:
• 1.6276: short term Fibonacci 38.2% retracement level, calculated for the drop from September 1st daily high 1.6642 to September 10th 10-month low 1.6050. This level was tested on Friday with stunning accuracy, when the price topped at a 1-week high one single pip below it!
• 1.6327: Friday September 5th closing price, which is the beginning point of the gap seen last week.
• 1.6346: short term Fibonacci 50% retracement level, calculated for the drop from September 1st daily high 1.6642 to September 10th 10-month low 1.6050.
• 1.6388: short term Marji 57.1% retracement level, calculated for the drop from September 1st daily high 1.6642 to September 10th 10-month low 1.6050.
• 1.6416: short term Fibonacci 61.8% retracement level, calculated for the drop from September 1st daily high 1.6642 to September 10th 10-month low 1.6050.
• 1.6473: short term Marji 71.4% retracement level, calculated for the drop from September 1st daily high 1.6642 to September 10th 10-month low 1.6050.
• 1.6485: medium term Fibonacci 38.2% retracement level, calculated for the whole move from July’s 6-year high 1.7190 to September 10th 10-month low 1.6050.
• 1.6620: medium term Fibonacci 50% retracement level, calculated for the whole move from July’s 6-year high 1.7190 to September 10th 10-month low 1.6050.
Trend:
• Short term: Down, as long as we are below 1.6276.
• Medium term: Down, as long as we are below 1.6473.
• Long term: Up, as long as we are above 1.5492.
Article originally appeared on MarjiFX.com