Today we expect the release of data from the US on housing and the index of manufacturing activity from the Federal Reserve Bank of Philadelphia for January, which is forecasted to be less than the previous month. Given the massive sell-off of the dollar by investors, we can assume that this trend will be maintained. The dollar index has only moved away from 3-year lows and at the moment we are seeing correction in the markets.
At the moment, our pair is fixed under the level of 1.39 and, if we consider our chart from the graphical analysis, we can see the formation of a "head and shoulders" pattern. However, given the fundamental factors, we expect the pound to strengthen, as negotiations for Brexit advance and the slowdown in the US economy continues.
Therefore, we can consider this orientation of our pair as a correction and further expect the pair to grow.
Our trading advice is to look for points to enter long positions after the correction is completed. However, if you get to a short position, the exit points will be near the 1.3810 and 1.3750 levels.
