Following on from Thursdays Analysis
Friday Saw GBP/USD Print session Lows after the Weaker UK retail sales release – For UK Participants including myself the number was not a surprise due to unprecedented weather conditions over the Dec Period .
Interestingly the 1,5975 Area I had suggested in Thursdays Mid Morning Report as Clue for Direction was where the Biggest Volume traded for not just that day but for the week @1.5972 to be exact .
Here,s why I point out volume .
The Most interesting aspect of Friday,s session was the complete turn around after the 50 pip sell off on the Back of the retail Number . Bulls mounted a vicious attack on the bears soon after, never stalling right up into the Friday Close . “What you should keep in mind ” – With Thursday,s Large Vol Sell off the bulls on Friday were able to bid past the 1.5975 with ease erasing all earlier loses for the Week .
Bears clearly find themselves under extreme pressure and have pretty much been steam rolled to oblivion in early 2011 . The interesting fact is that now Large Spec have finally turned net long while Commercials have reversed to net short .
We are now at the crossroad and this weeks price action should be a key Driver to the next potential push in direction over the longer term ( 3 / 6 month ) outlook – with last weeks High and low coming into focus 1.5835 / 1.6058 more so than ever – here is why
There are two main Drivers at hand –
1) Will the bulls have legs to carry momentum with a daily close above 1.6058 this week
2) Will the bears from the get go of Sunday night and try to Defend lasts weeks Highs to force the hand of the Bulls and exert what they hope will be the formation of a right hand shoulder of a potential Head and should pattern formation . ( Weekly Perspective )
Despite the deteriorating data Bulls came out in force to prompt up the Pound . This Weeks last dash into the Friday close will leave bulls content having achieved further momentum . They will now look to maintain this momentum to target new Highs with a close above 1.6298 which could then in turn see a further attack of the Fib extension with the 200 Ema running close under it( Weekly perspective chart below Further Rise/ or Stall into right shoulder H@S ) pricing in rumors of rate hikes later this year.
Bears clearly found themselves under water from the get go of 2011( COT example ) They will now try to exert one last ditch attack and attempt curtailing any further Bullish Momentum . This week should prove Key to that undertaking creating would they will hope is the right shoulder of a potential Head and shoulder Formation and shoot for yearly lows . Bearish participant will want to see price test last weeks lows THIS WEEK to Confirm The H@S capping further
bullish gains for the foreseeable future, failure to do so would suggest a further mauling down the line
The Last week of January may well prove Pinnacle .