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The same as the EUR/USD currency pair, the cable is has a potential to be highly volatile this week, as ascending triangle formed on a monthly chart in 2007 is finally moving to its apex. Moreover, fundamental releases from the U.K. and the United States will add more liquidity into financial markets.
Last week, Dukascopy Community members were most successful in predicting cable's performance, with more than 55% of votes being right. Therefore, this week's projection can be accepted with a high level of probability. Vast majority of respondents believe the pair will finish this week at 1.6657, just couple of pips from the last week's average price. Moreover, 72% of members are having a bearish view on the pair, while 56% of all opened positions are short. Nevertheless, even despite strongly bearish market sentiment during the last couple of weeks, the cable managed to advance more than 400 pips. However, after touching a daily R3 at 1.6823 the pair began moving sideways. From the upside, pair's appreciation is limited by resistances at 1.6726, 1.6764 and 1.6823. However, as we assume that the outlook is bearish, then short traders can focus on a weekly and daily S1 around 1.6622, a support line of the descending triangle on a 4H chart at 1.6600 and a weekly S2 at 1.6510. According to HelgaPehkel, the Pound is overbought, while trader Hem sees an opportunity of entering the market below 1.6835 with a take profit at 1.6600.
While U.K. manufacturing and construction sectors are sending mixed signals, services PMI and BoE's meeting can shed light on the real situation in the economy. At the same time, extreme weather conditions in the U.S. are expected to weigh on economy's ability to create jobs in February, hence, payrolls and unemployment rate can surprise markets to the downside.
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