bearish territory

GBP/USD On Friday, the British pound fell by 42 pips. The signal line of the Marlin oscillator has turned downwards, and the upper band of the descending price channel in green remains untested. Now the question arises - if the pound decides to reverse (or deep correction), will it proceed to test the price channel? The pound tends to test key levels, so it can rise to 1.3180. Price consolidation below 1.3034 will lower such probability.     Bringing the price back to the initial level of speculative growth at 1.2666 on July 6th, when US private sector employment data from ADP was released, will be a challenging task - a four-figure move lies ahead with strong intermediate levels (1.2847, 1.2720). It is possible that the price will reach the designated area in the first week of August (the Federal Reserve's rate decision will be on July 26th, and the Bank of England's meeting will be on August 3rd).     On the 4-hour chart, the Marlin oscillator has come close to bearish territory. Marlin encourages the price to overcome 1.3034 in the near term, but further difficulties may arise, the nearest one is the MACD line (1.2907). The rapid decline of Marlin carries the risk of divergence, in which case the price may rise towards the upper band of the daily chart's price channel.    

GBP/USD The British pound has stayed within the 1.2666-1.2720 range, but this time the exit occurred in the upper shadow. The 23.6% correction level acted as a limiting factor. The price will probably try to mark the August 3rd and 14th lows, and under favorable circumstances, consolidate below 1.2666 to reach 1.2590.   The Marlin oscillator continues to consolidate in a narrow range on bearish territory. It is possible for the price to reverse to the upside, although the chances of it are decreasing every day. In order to build a deep correction, the price needs to settle above 1.2720, then overcome the MACD line around 1.2780.     On the four-hour chart, the price failed to settle above the balance line, returning to 1.2666. The MACD line enhances this level. The Marlin oscillator helped the bears just in time - it is already in the negative territory.

Eurozone Services PMI falls to 48.3 in August (50.5 expected, 50.9 in July) Eurozone Manufacturing PMI rises to 43.7 in August (42.6 expected, 42.7 in July) Euro testing key support against the US dollar The data from the eurozone was no more promising, particularly Germany – the bloc’s largest economy – which has had a harder year than most and looks likely to continue to do so going into next year. There was a slight and unexpected improvement in the manufacturing number, albeit from a very low base and it still remains deep in contraction territory. But services contracted against expectations and the number was some way below forecasts and the July reading. Interest rate probabilities were pared back in the eurozone this morning too, with traders viewing the meeting in a few weeks as a coin toss between standing pat and another 25 basis point hike. Another hike is far from guaranteed in the cycle and today’s data certainly supports the case for pausing to see what impact past tightening has had.     Is EURUSD heading into bearish territory? The euro has been falling against the greenback for a month or so now, as have many other currencies as the dollar has performed well on the expectation of US rates remaining higher for longer.   EURUSD Daily     It’s now fallen back to a level that could tell us whether traders are viewing this as a corrective pattern or a broader reversal. While that is to a large extent a subjective view, there is a train of thought that when it’s trading above the 200-day simple moving average it’s in bullish territory, and below it’s in bearish territory. It’s worth noting there are many other ways to define it too. The pair is now testing the 200-day SMA from above and this also coincides with the lows from late June and early July. A break of this could be a bearish signal, with the next test coming around the 1.0650-1.07 where the next support level from May coincides with the bottom of the 200/233-day SMA band.

EUR/USD In the final trading day of 2023, the euro fell by 25 pips on below-average volume, finding support at 1.1033. Since there was no significant profit-taking, we expect the uptrend to remain intact. A break above the level of 1.1076 opens up a substantial target like 1.1185, which is the November 2021 low and the March 2022 high. We could see bullish potential at 1.1280. The Marlin oscillator has also corrected lower, visually preparing for a reversal into a new upward wave.   All the price action and oscillator movements occur within an uptrend. It's worth noting that this progress is taking place within a medium-term green-colored ascending price channel. Even if there is a break below the 1.1033 support level, we will not hastily revise the main scenario.   On the 4-hour chart, the price is supported by the balance indicator line. The Marlin oscillator is in a bearish territory but may require a trigger to return to the bullish territory. Today's reports on the final estimates of the eurozone and U.S. industrial PMIs for December may serve as a catalyst. The forecasts remain unchanged (44.2 and 48.2, respectively), but tomorrow's Manufacturing ISM for December is projected to stand at 47.1, up from 46.7 in November. We can assume that today's final estimate of the Manufacturing PMI might surprise everyone and turn out to be better than expected. Such, albeit minor, optimism could sustain risk appetite and push stock markets and counter-dollar currencies into the green zone.