Cable near-term price action mirrors the Brexit "pause", what to look out for next?
Cable near-term price action is also seen in limbo at the moment
After the yes and no votes yesterday, cable found itself bouncing off the 100-hour MA (red line) before sinking back under the key near-term level into trading today.
Right now, price is hovering in between the two key hourly moving averages with the 200-hour MA (blue line) seen below @ 1.2792.
From a technical perspective, it indicates that the near-term bullish momentum has been broken and the bias is more neutral now. Essentially, you can say that traders are in limbo as they wait on further Brexit developments in the coming days.
So, what can we look out for next?
I go into more details in that regard here and given the current situation, the next key twist in the Brexit drama will be from what the EU decides on the extension request.
On the balance of things, there is still much to be optimistic in the pound. Johnson did not pull the WAB altogether yesterday, which means he may be open to a short technical extension to get this deal across the finish line.
If we do see such a scenario, that is a positive for the pound. That said, the longer-term picture may not be so rosy as highlighted here yesterday.
We'll have to wait and see what happens in the coming days but from a technical view, the trade will be to go with a break on either side of the key hourly moving averages for short-term/intraday positioning.
However, that needs to be backed up by the right fundamentals/headlines or otherwise traders will risk getting caught on the wrong side of the fence by moving too early.