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GBP/USD Faces Growing Risk for Bullish Breakout as DailyFX SSI Flips

GBP/USD Faces Growing Risk for Bullish Breakout as DailyFX SSI Flips

David Song, Strategist

Talking Points:

- GBP/USD Remains Capped by 1.6410-40 Ahead of BoE Carney’s Speech; SSI Flips to Negative.

- USD/CAD Continues to Carve Higher-Lows as Canada Retail Sales Disappoints.

- USDOLLAR Preserves Bullish Setup Ahead of U.S. Durable Goods, Final 2Q GDP Report

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GBP/USD

GBP/USD Faces Growing Risk for Bullish Breakout as DailyFX SSI Flips
  • GBP/USD remains capped around 1.6410 (61.8% retracement) to 1.6440 (23.6% expansion) along with channel resistance; need a break & close above this region to favor bullish outlook.
  • Bank of England (BoE) Governor Mark Carney to speak on September 25 at 12:40 GMT; will the central bank head highlight a growing dissent within the committee?
  • DailyFX Speculative Sentiment Index (SSI) highlights a material shift in retail position and has flipped for the first time since August, with the ratio current standing at -1.04.

USD/CAD

GBP/USD Faces Growing Risk for Bullish Breakout as DailyFX SSI Flips
  • USD/CAD trims decline to 1.0985 as Canada Retail Sales unexpectedly contracts 0.1% in July, marking the first decline in 2014.
  • Inverse head-and-shoulders formation remains favored as long as USD/CAD holds above the August low (1.0809); string of higher-lows raises the risk for a higher-high.
  • Would like to see a topside break in the Relative Strength Index (RSI) to see a resumption of the bullish momentum as the oscillator remains stuck in a wedge/triangle formation.

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Read More:

Price & Time: Minor USD Reprieve Or Something More?

EUR/USD Overlooks PMI Results Despite Manufacturing At 13-Months Low

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10944.89

10947.5

10903.66

0.06

88.27%

GBP/USD Faces Growing Risk for Bullish Breakout as DailyFX SSI FlipsGBP/USD Faces Growing Risk for Bullish Breakout as DailyFX SSI Flips

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar Index retains ascending channel, bullish RSI after paring the decline to 10,903; will stay supportive as long as the current structures remain in play.
  • Even though U.S. Durable Goods Orders are expected to contract 18.0% in August, a marked upward revision in the final 2Q Gross Domestic Product (GDP) report may heighten the bullish sentiment surrounding the dollar as it boosts interest rate expectations..
  • Will continue to watch 10,989 (50.0% expansion) to 11,009 (July 2013 high), but fresh comments from Fed dove Charles Evans may drag on the dollar as the Chicago Fed President is a voting-member on the FOMC this year.

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Release

GMT

Expected

Actual

Fed's James Bullard Speaks on U.S. Economy

13:00

House Price Index (MoM) (JUL)

13:00

0.5%

0.1%

Fed's Jerome Powell Speaks on U.S. Economy

13:20

Fed's Esther George Speaks on U.S. Economy

13:30

Markit Purchasing Manager Index Manufacturing (SEP P)

13:45

58.0

57.9

Richmond Fed Manufacturing Index (SEP)

14:00

10

14

Fed's Narayan Kocherlakota Speaks on U.S. Economy

18:00

Click Here for the DailyFX Calendar

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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