We can say that yesterday was a challenging day for day traders with both major currency pairs fluctuating directionless sideways. The worst performer was the cable, which was on a roller coaster after the highest U.K. court ruled the government needs parliamentary vote to trigger the countdown to Brexit.
While that decision soften the government's Brexit plans, it was not enough to push the pound toward higher price levels. In contrast, the pound responded with a slide towards 1.24 due to the fact that Scotland, Wales and Northern Ireland did not need to have a say before talks are triggered. This should be some comfort to Prime Minister Theresa May.
Meanwhile, the GBP/USD broke above its recent barrier at 1.2545 and posted gains towards 1.2590/1.26. Whether there could be room for further gains remains to be seen and hinges on investors’ appetite for sterling. If the pound falls however back below 1.2490 we anticipate further losses towards 1.2415 and possibly even 1.2380.
There are no major important economic reports scheduled for release today. Sterling traders may pay attention to a speech of Bank of England Governor Carney which is scheduled for 16:00 UTC.
Is the euro formatting a head-shoulders pattern?
Recently, the EUR/USD traded sideways between 1.0775 and 1.0720. In short-term time frames we see a higher likelihood of an upcoming bearish breakout provided that the euro falls significantly below 1.0720 while it refrains to trade above the resistance area around 1.0765. Below 1.0720 it may fall towards 1.0680. Above 1.0765 the euro may extend its gains towards 1.0785/1.08.
The German Ifo Index is scheduled for release at 9:00 UTC and could have a short-term impact on the euro.
Here are our daily signal alerts:
EUR/USD
Long at 1.0780 SL 25 TP 20, 70
Short at 1.0675 SL 25 TP 20, 40
GBP/USD
Long at 1.2560 SL 25 TP 25, 40
Short at 1.2490 SL 25 TP 25, 45
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