Preliminary technical adjustment signals are presented, and the strong pound may slow down in the short term
The pound rose to 1.4235 against the dollar, the highest level in the past three years. The bet that British vaccination will prompt the economy to reopen faster, as well as the relief from the Brexit trade agreement, have pushed the pound to continue to rise against the dollar in recent months. On the other hand, Fed Chairman Powell on Wednesday dispelled concerns that rising inflation may lead to cuts in monetary stimulus measures, saying that the Fed will not change its policy until the economy improves significantly. After Powell’s speech, the market’s adventurous sentiment rose across the board. Commodity currencies such as the Canadian dollar, Australian dollar, and New Zealand dollar all rose, while the US dollar and other safe-haven currencies fell accordingly.
The trend of the pound against the US dollar, RSI and the stochastic index have been in the overbought area in recent months, and they have shown initial signs of decline so far. The stochastic index has formed a small double top and has a technical divergence corresponding to the exchange rate trend, all of which are British pounds is going to start adjustment in short term. As for the exchange rate trend, it can be noted that in January and April 2018, two tops were formed at 1.4344 and 1.4376, respectively, and then there was a round of sharp decline to the low of 1.2660 in August of the same year. Therefore, the current upward resistancehas also take these two areas as an important reference; greater resistance will point to the psychological barrier of 1.45. The current recent support at MA-10 of 1.40; the next key is the MA-50 of 1.3710. This area is also an upward trend line extending from last November. If the pound falls below this area in the future, it is expected to have a great opportunity Will usher in a new round of decline. Calculated based on the cumulative increase since September last year, the adjustment range of 38.2% is 1.3640, and the range of 50% and 61.8% will be seen at 1.3455 and 1.3265 respectively.
Resistance 1.4244-1.4376 – 1.4500
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