Cable continues to trade above the 100-hour moving average
And that means that the near-term bias in the pair remains more bullish as price holds above the two key hourly moving averages. Negative Brexit headlines weighed on the pound in trading yesterday, with the first taking cable to a low of 1.3099 where it tested bids around 1.3100 before bouncing back up.
Of note though is that buyers continue to hold above the 100-hour MA (red line) into the hourly closes. That is a signal that they are poised to keep the near-term upside bias in the pair. There hasn't been any firm negative sentiment on Brexit negotiations so far but the headlines overnight aren't too encouraging to say the least.
Although buyers have been able to keep the near-term bullish bias, the 100-day MA (red line) is the key level that they need to break above in order to justify a further move to the upside. That currently sits at 1.3160. This week was the first time the pair tested the 100-day MA since breaking below it on 27 April. Hold a daily break above and the bearish momentum in cable will be broken.
The next known risk event for the pound will be UK retail sales data due at 0830 GMT. That will add some spice into things but the main risk event is that of the unknown, and that is Brexit headlines. As I've mentioned before, trading the pound now is all about the Brexit rhetoric. Nothing else really matters at the end of the day. And yesterday's trading was a good example of that.
In times like these, technical levels are your best friend to define and limit risk but you can't cry over spilled milk when Brexit headlines swing price one way and back the other. It's a volatile time trading in the pound now so if you are in it, that's the kind of risk you have to swallow.
