This article was submitted by Antreas Themistokleous, market analyst at Exness.
The trends from last week have generally continued the trends from previous weeks with some instruments retesting major trendlines and volatility playing a critical role in the days ahead. This preview of weekly data looks at GBPUSD and XAUUSD ahead of the critical release on Wednesday ,November 16th, of United Kingdom’s annual inflation.
The main event in last week was the US inflation rate which came out to be 7.7% against market consensus of 8%. The triple hike by the Fed on 2 November has still to show support for the greenback since the US Dollar is constantly losing value against other major currencies until the day of this report. .
This week we have various publications coming up that can affect the markets like the Australian unemployment rate, EU and Japanese inflation rates and probably the most important publication of the economic calendar this week, the UK inflation report being released on Wednesday November 16th. Most markets will probably be quite volatile throughout the week since these publications will affect a number of instruments.
Cable, daily
The pound entered a third correction in the last week with the overall trend being bearish which is also confirmed by the weekly downward trendline which is still valid since February 2022. After the US inflation rate publication the US Dollar lost some momentum enabling these minor swings to happen on the charts and the upcoming publication for the UK inflation report is expected to have some effect on the cable chart depending on the release.
On the technical analysis point of view the price is currently trading around the 1.17 price area which is a very strong point of resistance since it consists of the 78.6% of the Fibonacci retracement level and the upper band of the Bollinger bands (even trading above the bands a couple of days ago indicating extreme volatility in the market). Given this is a major resistance level on the chart the continuation of the downward movement is the most probable scenario given that the Stochastic indicator is also showing overbought levels. If the price is to correct to the downside we can expect the first point of support being the 1.15500 price area which is a psychological support round number, the 61.8% of the Fibonacci retracement level and the 50 day moving average area. Trading the direction of the actual release happening on Wednesday instead of entering now (except to scalp) might make sense.
The “yellow metal” continued the bullish momentum hard with the price trading above the Bollinger bands for more than a week, signaling that the volatility is fueled up and holding strong to the day of this report.
The price broke above all the technical points on the chart including the major trendline, 50 and 100 moving averages and even the upper band of the Bollinger bands. Even Though the Stochastic indicator is in the overbought levels for the last week, there is no sign of decline in volume therefore the current trend is more likely to continue in the following days. Some minor corrections might happen intraday but the overall long term momentum is bullish for the time being.
A continuation to the upside could have a first point of resistance at the $1,810 price area which is the 100% of the Fibonacci retracement level and also the inside resistance of the last major swing since early August. A correction to the downside could find some support around the $1,735 price area just above the 61.8% of the Fibonacci and a second support at around the $1,710 area just below the 50% of the Fibonacci and also the 100 day moving average.
Buying the peaks is not a very successful or limited risk move so the most probable scenario we can expect to be the correction before resuming the strong upward movement since the price is already at least respecting the Bollinger bands for now.
Disclaimer: opinions are personal to the author and do not reflect the opinions of Exness or LeapRate.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
