Yesterday trading in the pair was very volatile and the pair decline a little. High volatility was the result of increasing trade volumes and news from the Middle East where on Sunday Saudi Arabia announced it was breaking off diplomatic ties with Iran.
In addition, macroeconomic statistics came out yesterday in the UK and in the US. The UK Markit Manufacturing PMI for December fell to 51.9 points, instead of forecasted 52.7 points, while similar US index declined from 48.6 to 48.2 points when economists expected a growth to 49.0 points.
Support and resistance
Bollinger Bands on the daily chart is moving down while the price range is narrowing. MACD is falling and giving a moderate sell signal. Stochastic is in the oversold zone and trying to turn up.
The indicators recommend short positions.
Support levels: 1.4700, 1.4662 (local low), 1.4600 (14 April low).
Resistance levels: 1.4730 (local high), 1.4765, 1.4800, 1.4835, 1.4864, 1.4894 (29 December high), 1.4934, 1.4956, 1.5000 (psychologically important level).
Open short positions from current prices with the target at 1.4630 and stop-loss at 1.4750. Validity – 2-3 days.
Long positions can be opened after the breakout of the level of 1.4790 with the target at 1.4950 and stop-loss at 1.4765. Validity – 2-3 days.