Overview:- By analyzing the daily technical chart we can see that the tug of war is going on due to global uncertainty and picture is still not clear, it seems as blur. The pair is trading and sustaining between the narrow ranges of 1.2200 to 1.2400 level which indicates that breakout on either side will give us new buy or sell signal. If bulls able to give closing above 1.2400 level then it will open the way towards the 1.2580 and 1.2700 is the extreme level which can be tested by bulls on contrary if bulls trades and sustain below the 1.2200 level then it will open the way towards 1.2000 level and furthermore.
Fundamental Analysis:- The grace period is over and the pound may lose ground – after the EU says it is “unconvinced” by the new British Brexit plan. According to the British press, some 30 opposition Labour MPs may also back the plan, giving it an ample majority.
However, support may evaporate if he reaches a compromise with the EU. Johnson has already opened the door to changes by saying that the plan is a “broad landing zone” and not a final offer. And that may hurt the pound.
Brexit developments will compete – at least temporarily – with the all-important US Non-Farm Payrolls report. A series of three disappointing data points have lowered expectations for the US jobs report as a global slowdown takes hold. The latest was the Purchasing Managers’ Index (PMI) for the services sector which dropped to 52.6, the lowest in three years.
Technical Analysis:- Pair is moving between the minor EMA lines (9,14 and 50) and candles are also providing us neutral signal where we may get neutral signal for the time being. This week’s closing matters a lot. The bearish crossover on MACD indicator is still intact and providing us bearish signal RSI has turned down to below 50 level which is showing weakness in the pair. The primary trend is still bearish and secondary trend is also flash sell signal after a correction.
What next:- If bears take the charge and settles below 1.2200 level then we may see further weakness in the pair and if pair give positive closing i.e. above 1.2400 and cover all the losses then we may see further buying till 1.2580 level first and furthermore. The positional traders are advised to wait for the clear signal where intraday traders may go for sell the pair to follow the primary momentum. The 1.2580 level is immediate resistance level followed by 1.2700 whereas 1.2000 level is strong key support level followed by 1.1800 level.
Trade idea:- Based on chart and studies above we can suggest that sell the pair below 1.2200 target is 1.2000 and 1.1800 sl is 1.2450 level.
