It seems like only yesterday that cable was an unstoppable force in a run up to 1.71 from 1.48 but with the decline late in the week the pair has now fallen in 5 consecutive weeks. It’s the first 5-week losing streak since April-May 2012. There hasn’t been a six-week losing streak since Aug-Sept 2011.
Specs poured into the pair after Carney indicated rate hikes could come sooner than the market was expecting but he later softened his position and cable has been sliding since. At the same time, a broad round of US dollar strength has swept up most currencies.
Still, the magnitude of the recent drop is small in comparison to previous declines and despite the extended fall the weekly RSI is still at a neutral level of 50. By those measures, the decline could easily continue.
Cable weekly chart
I think selling cable is the right trade but it’s the wrong time. Wait for a bounce and sell it down to 1.62.
