Pound Volatility to be Pivotal in FX Market Profit Taking this Thursday
GBPCHF Wedge Breakdown | Selloff Until 1.4500 Support
After consolidating inside a rising wedge pattern on its 1-hour chart, GBPCHF showed increased momentum to the downside as it broke below support. Price seems to be pulling up for a quick retest of the broken wedge support at 1.4750 for now but could be in for longer-term losses.
UK services PMI came in weaker than expected for February, as the index showed a slower expansion in the industry. This could mean that the sector could make a smaller contribution to overall economic growth. Meanwhile, the Swiss GDP released earlier this week showed a stronger than expected 0.6% growth figure versus the projected 0.3% expansion.
The BOE interest rate statement could be a big catalyst for this pair though, as an upbeat announcement could allow prices to recover. A bounce back above the 1.4800 handle could confirm that the downside break was a fake out and that the pair is ready to resume its climb.
On the other hand, if the BOE takes on a more cautious stance, the pound could give up more ground to the franc and take prices down to the next support near the 1.4500 handle. After all, the rising wedge is around 300 pips in height and the resulting breakdown could be of the same size.
GBPAUD Descending Triangle Breakout | Potential Pullback to 1.960
GBPAUD recently made a break below the descending triangle support at the 1.9600 major psychological level after the UK printed a weak services PMI reading. Take note that the services sector accounts for majority of the UK’s overall economic growth and a slower industry expansion could mean a lower contribution to GDP.
The upcoming BOE interest rate statement could still trigger a bounce for the pair, as policymakers usually seem to be upbeat about the UK’s economic prospects. This could pave the way for a correction to the 1.9600 broken support zone, which might hold as resistance. In that case, price could resume its drop to the recent lows around 1.9500 or create new lows.
Take note that the RBA decided to keep interest rates on hold in their latest rate statement, although they indicated that they are keeping the door open for further easing. This might lead to a stronger bounce for GBPAUD, especially if the BOE retains its hawkish stance and reiterates that their next move is likely to be a rate hike.
The path of least resistance is to the upside, as GBPAUD could eventually move back inside the triangle and test the top at 1.9800. However if the downside momentum persists, price could be in for around 400 pips in losses, which is around the same height as the chart pattern.
Tesla Shares Consolidation Pattern | Symmetrical Triangle Breakout
Tesla shares are continuing to consolidate inside a symmetrical triangle on its daily time frame, as investors are maintaining a hold bias on this stock. A breakout could take place anytime soon, as the consolidation is getting tighter.
The 50 simple moving average is moving below the longer-term 200 SMA on the daily time frame, hinting that a downside break is more likely. This could mean another leg lower for Tesla shares, possibly on a break below $200/share. MACD is on middle ground and barely offering any signals for now.
RSI also moving lower, confirming that sellers could take control of price action. Keep in mind that the recent bounce on the stock was spurred by the pickup in oil prices in the past weeks, as this could renew the appeal of the company’s electronic cars. However, the commodity price bounce failed to draw enough traction, which might force the stock to return its recent gains.
Price could still break to the upside, although the 200 SMA might act as dynamic resistance for any gains. This could lead to a bounce off resistance around $230/share and a fresh opportunity to short the stock.