The close of the latest 4 hour candle was sufficient for us to take a SHORT position in this pair following a run up. The UK Retail Sales data (see below) simply added some fundamental momentum. The 4hour candles had been forming a steady six consecutive march upwards from the Hammer candles of July 19. The peak bull candle at yesterday’s (July 20) close and with a long wick followed by the following bearish candle with a wick to the south suggested at least a pause in the uptrend or a further retrace. The 08:00 candle this morning suggested further downside with target 1 at 1.7546 and possible target 2 at 1.7465 where we started a few days ago.
UK June retail sales undershoot expectations due to wet weather, which stirred apathy for summer fashion purchases. The headline sales figure contracted by 0.9% m/m, reversing the 0.9% m/m gain of May. The median forecast had been for a 0.5% decline. The y/y comparison was 4.3%, short of the 5.0% median forecast and down from the 5.7% y/y gain seen in May. It’s not clear if the June 23 referendum, either the run-up or in the initial wake of, had much impact. Anecdotal signs suggest that retail sales dipped in the week after the Brexit vote, but have since rebounded.
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