Key levels for this week's BoE and US NFP announcements
A reduction in UK interest rates by the Bank of England is pretty much fully priced in. This means that any surprises are likely to cause a move higher in GBP/USD. If the pair is seen holding first support at 1.3320/10 this allows a test of strong resistance at 1.3405/1.3415.
This is the main challenge for bulls before the weekend and is key to direction. A break above this level (and a close tonight for confirmation) is therefore a buy signal. We should initially target three-week highs at 1.3480, then 1.3520/30.
Traders going long on GBP/USD should consider stops below 1.3280. Failure here targets minor support at 1.3250/45, while the last line of defence for bulls is support at 1.3220/10.
AUD/USD has strong trendline resistance at 7635/40 which is key to direction into the end of the week. A break above the July high at 7673 (and a close for confirmation) should therefore be seen as a buy signal.
Failure for AUD/USD to beat strong trendline resistance at 7635/40 targets first support at 7335/30, then better support at 7495/90 this week.
EUR/USD is in a three-month bear trend and we are running into a lot of resistance in the mid-1.1200 area as we become overbought, so gains are likely to be limited. There are many challenges for bulls into the end of the week, starting with strong resistance at 1.1230/35, again at 1.1265/69 and lastly at 1.1290/1.1300. Bulls require a weekly close above here on Friday to be more confident of further gains next week.
E-mini S&P has seen profit-taking since making a new all-time high at 2177.75. Having taken four weeks to climb from 2140 to this all-time high it took less than 48 hours to lose all these gains. Further profit-taking with a break below this week’s low at 2142/41 meets two important supports. Firstly, three-and-a-half-month trendline support at 2137/36, then Fibonacci support at 2132/31. So this five-point band is likely to be the most important support of the week.
Therefore, however, a close below 2130 is a short-term sell signal and initially targets support at 2118/17, but we could fall as far as 2103/01 before strong buying interest returns.
Technical Analyst & Trader
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