[B]FOREX NEWS: OVERSOLD LEVELS CALL FOR BULLISH PULLBACKS[/B]
Forex News: Yesterday the Eurozone CPI showed that inflation is improving but despite this, the pair descended below 1.0525 after a small bullish pullback. Volatility remained relatively high and price approached minor support.
The fact that 1.0525 support was broken yesterday is a major victory for the bears but it must be noted that this level was broken before and price returned above it almost immediately. Also, we have minor support around 1.0495 and the Stochastic is close to oversold, so we expect to see a bounce higher. If the pair remains below 1.0525, the next target will become 1.0460, otherwise the move up may find resistance at the 50 period EMA.
At 3:00 pm GMT the U.S. Non-Manufacturing PMI (also called Services PMI) is released, showing the opinions of about 400 purchasing managers regarding the condition of the services sector. The forecast is 56.5, same as previous and usually numbers above it, strengthen the US Dollar.
The last event of the week is a speech delivered by Fed Chair Yellen at the Executives Club of Chicago on the topic of economic outlook. The speech should be treated with caution because it may spark increased volatility; the time is 6:00 pm GMT.
The British Construction PMI released yesterday matched analysts’ expectations and the event went mostly unnoticed but the pair continued lower and came very close to 1.2250 support.
The last candles show long wicks in both their upper and lower parts, which is a clear sign of indecision but also a warning that the bearish move will retrace higher. On top of that, both oscillators are moving into oversold territory, further increasing the chances of a move north. If this type of move occurs today, we don’t expect it to surpass 1.2350 but if the pair moves below 1.2250 before the mentioned pullback, the extent should be limited.
The British Services PMI is the last in this week’s series and shows the opinions of purchasing managers from the services sector regarding economic conditions in said sector. The impact is often low but usually, higher values than the expected 54.2 bring Pound strength; the time of release is 9:30 am GMT.
We hope you had a profitable trading week and we wish you a relaxing weekend.