ICmarkets
Long

Our take on Cable...

FX:GBPUSD   British Pound/U.S. Dollar
172 0 5
Although Cable remains afloat above the weekly broken Quasimodo support line at 1.4051, the bulls appear to be struggling here as the week ended with a 100-pip loss going into the close 1.4120. Technically, the reason for why this market failed to push higher likely stems from the supply zone seen on the daily chart at 1.4578-1.4467, which managed to force daily action down into demand at 1.3843-1.4036 by the week’s end.

A quick recap of Friday’s trading on the H4 chart shows that price was heavily bid from the aforementioned broken weekly Quasimodo support level, which saw price reach highs of 1.4140 going into the London open. Based on this recent action, coupled with the day closing above the 1.4100 handle, where do we see this pair heading today and possibly into the week? Well, we believe this market could head higher, here’s why:

• Daily demand at 1.3843-1.4036 responded nicely on Friday, which was accompanied by a daily AB=CD bullish approach (see green arrows).
• Weekly price, although struggling, is still holding above its aforementioned broken Quasimodo support line.
• The H4 high printed at 1.4140 around Friday’s London open seen marked with a black arrow likely removed the majority of offers from supply seen marked with a pink circle around the 1.4156-1.4136 region, thus potentially opening the path north to H4 resistance at 1.4163.

Given this, we’re going to be looking for a confirmed trade long off the 1.4100 handle today (see red arrows), targeting 1.4163 for partial profits, followed closely by the 1.4200 line (lower timeframe confirmation is preferred here due to the possibility of a fakeout through 1.4100). With the closest higher-timeframe supply not seen until 1.4578-1.4467, our team will look to trail the remaining position should price close above 1.4200.

In closing, we’re well aware that the fundamentals for the British Pound are not in a healthy state regarding the Brexit situation, and the trend is predominantly south at the moment. However, in light of what structure we’re seeing right now (see above), we feel buying this pair is the more logical route to take.

Levels to watch/live orders:

• Buys: 1.4100 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
• Sells: Flat (Stop loss: N/A).
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