A nice falling trend line has been established following the ECB’s dovish rant. The spot looks set to test 1-hr 200-MA – 1.1461. That would push the RSI into the oversold territory, so further losses are to be viewed with caution…
ECB’s dovish bias hasn’t gone down well with the German Bund traders. The 10-year yield has re-entered falling sideways channel and is likely to extend the drop to 5-week MA of 0.48%.
Daily chart – rising trend line coming from Apr 17 low and May 11 low offered supp around 1.1497 has been breached. ECB still stands ready to boost asset purchases if required… now this is likely to disappoint the EUR bulls..
The horizontal lines represent key support levels: 1.1467, 1.1436, 1.1376
The descending trend line is also seen offering support around 1.1450
Cable is hanging around 10-DMA level of 1.2961 after the post-retail sales rally fell apart at 1.3020.
The 1-hour 200-DMA level of 1.2965 has been breached. The quid has retraced 50% of the rally from 1.2812. 61.8% is 1.2932 – that is where the current sell-off may come to a halt, although I prefer to be a seller on upticks…
Monthly chart – Spot currently trades at 1.2590
1.2461 – May 2016 low
1.2239 – confluence of rising trend line and upward sloping monthly 50-MA
1.2621 – 50% Fibonacci retracement of 1.6185-0.9057
1.2672 – 38.2% Fibonacci retracement of 0.9407-1.4690
Indicators – RSI has turned bearish, MACD shows the bearish momentum is gathering pace