Yesterday’s expectations went as planned. Due to a growth in the euro/pound rate the USD weakened. The market is still thin. Be watchful and ready for sharp fluctuations. The hunt for decent stops before New Year is what the big players love most. The calendar is empty, so a spike in volatility is likely to occur through the cross rates.
I added the euro/pound cross because recently it has been hindering me from forecasting the direction of price movement for the euro/dollar and pound/dollar. After the fall to 0.7306 on 23rd December, the pair has flipped into a consolidational phase. The pair has been in an upward corridor for 55 hours. This pattern carries with it risks that the euro will strengthen against the pound to the U3 at 0.7441. Keep track of how the price behaves near the lower limit.
If the sellers are able to pass 0.7350, the pound will have real weight behind it. In the forecast I’ve indicated how the price may move if it leaves the corridor.
The GBP is trying to win back losses from the USD. All the indicators used in this review are in the camp of the buyers. The GBP is preparing to strengthen on the hourly.
I’ve highlighted an inverted bar (hammer) on the graph. If the bulls manage to make a go of the bullish pattern, the GBP/USD will shift to 1.51.