- 53% of pending orders in the 100-pip range are to buy
- 58% of traders are bearish on the Pound
- Important resistance lies near 1.3480
- Upcoming events: US Core Durable Goods Orders m/m, US Durable Goods Orders m/m, US Pending Home Sales m/m, FOMC Member Brainard to speak
The Sterling strengthened significantly against the US Dollar, as all the main components of the UK retail sales report showed better-than-expected figures for August.
After the release, the GBP/USD jumped by 0.67% or 91 base point to touch the daily high of 1.3606 However, by the next couple of hours the pair resumed trading in a weaker area between the 1.3525 and 1.3560 marks.
US fundamentals only
The economic calendar for this session is packed with data releases from the United States. The country is to publish its Core Durable Goods Orders and Durable Goods Orders for the month of August at 1230GMT. Subsequently, the US National Association of Realtors is set to release Pending Home Sales for the same period at 1400GMT. The session is to end with the Federal Reserve Governor Lael Brainard's speech ‘Labor Market Disparities and the Mission of the Federal Reserve' at a bank lender forum at 1800GMT.
GBP/USD forms falling wedge
In accordance with expectations, a combined resistance formed by the 55-, 100- and 200-hour SMAs did not let the Pound to recover against the Dollar. In contrast, the pressure from those indicators formed a short-term falling wedge that most likely is going to break during this trading session.
In theory, the breakout should occur in the northern direction. But in this particular case, the upper side still remains protected by the above moving averages plus the monthly R2 at 1.3485, while the opposite direction is obstructed only by the weekly S2 at 1.3327. In addition to that, in larger perspective bears most probably are willing to push the rate back to the 1.3208 area.
Hourly chart
GBP/USD continues to move away from the upper wedge boundary, thus indicating to a possible decline in the medium term. The rate breached the weekly S1 at 1.3213 and is moving towards the weekly S2 at 1.3328. Nevertheless, upside risks could push the rate back in the 1.3410/85 territory.
Daily chart
Market sentiment is strongly bearish
The bearish market sentiment has once again taken the upper hand, as the number of short positions on Wednesday is 58% (-2%). Meanwhile, 61% of pending orders are to buy the Pound.
OANDA traders are bearish on the pair, as 65% of open positions are short (+2%). Traders at Saxo Bank are likewise bearish with 67% short positions (-2%).