Pound continues to fall after a weaker-than-expected Service PMI data. After initially finding resistance at 80 EMA, candles now break and hold below 20 SMA, indicating a strong bearish trend. Candles have now broken below 1.53 and is expected to continue falling should Friday’s release of U.S Non-Farm Employment change data reflect a positive employment change. Although the pair remains on a strong bearish trend, 1.5226 could pose as a strong support which we may see a trend reversal.
Paying attention to the Fibonacci Retracement on the H4 chart, candles have touched 50.0% at 1.5250 where exhaustion may possibly occur. Although stochastic oscillator is in the oversold region, it has yet to provide any indication of a trend reversal as it has yet to hook above 21. In addition, given that U.K Cash Rate and MPC Rate Statement are to be released later, high volatility could be expected and a movement in either direction could occur.
Focusing on the H1 chart, candles have broken below Fibonacci Expansion 161.8% at 1.5279 and is expected to continue falling. The next possible level of exhaustion is at 200.0% at 1.5214 where we may see the bearish momentum of the pair come to an end.