Never rule anything out with cable – technical analysis 7 August

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The pound speaketh and all shalt listen.

Just shy of a 300 pip round trip is like the cable of old. It either slaps a brand new Jag on your desk or rips the shirt off your back and the fillings out your mouth.

1.5492 is the high so far today and that was bang into strong resistance at 1.5488. This is a very strong level of technical resistance. Naturally I expect there to be resistance at 1.5500 and Mike has listed options and orders there already.

The thing with cable is that even after such a big move it can suck you in to a false sense of security and hit you again. Even though we’ve drifted back to 1.5455 there is a risk that it smacks higher again. If we break 1.55 then the next levels to look at will be the 200 dma at 1.5535 and the Dec 2012 trend line.

gbpusddaily 07 08 2013

Time will tell whether this move is sustainable and we can expect some volatility while the market decides which way it wants to go.  My view is that the inflation meeting wasn’t a game changer in real terms. Monetary policy has been stated and we are likely to go back to the dollar trade, but for now it’s still about the pound.

My summer range top was 1.5500 and I’m toying whether to keep that view or raise it. As always the price action will dictate my final decision.

We took out virtually all the technical support on the way down and the majority of resistance on the way up. In the first instance look for broken resistance levels to become minor support. The moves would have cleared a lot of the market so it may take a short amount of time for this to establish once again. Here’s my earlier tech levels Technical levels 7 August which you can use to calculate the new support points. Don’t hang you hat on them but keep them in mind.

Author: Ryan Littlestone

Ryan Littlestone has been working in financial markets for more than 20 years. Wide-eyed, he stepped out of Bank station in London to join LME founding member Rudolf Wolff where he worked his way to the main order desk and brokered customer orders to the LME floor and across virtually every global market. An opportunity to help set up and run a new LIFFE floor operation saw him catch the trading bug and it wasn’t long before the pull of the pits was too great to refuse. He became a ‘local’ and has been trading his own account for more than 11 years.

2013-08-07T12:13:45+0000

All|Americas|Technical Analysis

GBP/USD|Technical Analysis|technical levels

Ryan Littlestone

12 Comments

  1. “Never rule anything out with cable”

    why only with cable ?
    forex dont have any rules !!

    green pips

  2. 3 higher highs on big bars with only a doji in between, combined with strong fundamentals, low expectations and a market that has been complacently short in the face of good news. I’d not be surprised to see the market go right past the 200 day and have a go at the channel top.
    The only problem comes in the longer term as a higher pound will weaken the recovery and pull the UK back down since there isn’t adequate fiscal tax cuts or spending to keep gdp growing faster than rest of the world.

  3. Pretty strong move indeed. I actually wonder why, because low rates are kept for a long time, even longer than in the US probably and inflation stays high, so does QE. Shouldn’t that lead to a weaker GBP?

  4. I reckon this is manic short covering in action … everyone and his dog was shorting cable into the meeting as carney was expected to expand QE .. it was the ‘obvious’ trade … whoops …. and we all ‘cover’ as we squeeze through the head of a pin.

    carney seems to have really embraced the worst of british culture … I mean why do anything if you can sit on your a8se and just collect a check for doing nothing? british industry to council sink estate culture in action.

    welcome to the uk buddy ..

  5. Rates GOING lower and more QE would keep the pressure on the pound. Those are off the table so in theory the only way is up.

  6. If he’s asking for a *check*, he’s embracing the worst of American culture – stuffing with the spelling just for the sake of it. :P
    Besides, he doesn’t want a cheque, he wants a gong. Just ask Adam.

  7. It’ll all work out Schubes.

  8. Ryan,Thanks I overlooked Your Write-Up,Now the Waiting starts,Keep us up to date please,Cable a Great one to Trade with Guts, Zo

  9. seems everyone misjudged carney’s intentions .. unless this is all a massive head fake … I had a small short cable options position which i’ve now written off .. hey ho … luckily it was small so no tears at bedtime.

  10. I think all these recent moves are quite the effects of market unwinding positions. Much was betted on tapering. With that decision closer at hand and completion of all major central bank OMP less BOJ, it seems like heavily shorted pairs gets covered and long ones get unwoun regardless of what news that come out. Not really convinced that recent data deserves a radical offload USD treatment but it sure seems like this unwinding is going to stick until we get a definitive answer from Ben. Staying sides until we either get the take our own sweet time to cut QE or we cut QE now indication.

  11. Just trade the price action at key levels,,,who cares what the bernank and carney say and do and what the market positioning is…watch the price and get on board the move. Ichimuko forever. long cable @ 1.53694…short usd/jpy@97.988

  12. High chances for the market to reach 1.5580, GBPUSD;
    EUR USD – 1.3415

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