ICmarkets

Interesting price action seen on Cable...

FX:GBPUSD   British Pound/U.S. Dollar
172 1 5
Monthly view: The monthly chart shows we’ve been trending south since hitting the monthly swap level at 1.7134. Current price action shows that the bulls are beginning make a stand from just above a monthly demand area coming in at 1.4225-1.4541. Quite frankly though, until we see a break above the monthly supply area at 1.5551-1.5096, our long-term bearish bias will remain unchanged.

Weekly view: For the past five weeks, price has been teasing the underside of a weekly swap level coming in at 1.4989. However, we can see that the pound is beginning to peek above this level now – higher prices, anyone?

Daily view: From this angle, we can see price strongly closed above the aforementioned weekly swap level yesterday. As long as the buyers can defend this level we see very little stopping a rally, as the wick seen to the left marked with a green arrow at 1.5164 resembles supply consumption to us.

4hr view: The latest coming in from the 4hr pit shows price has firmly closed above 1.5000. This is fantastic; it appears we now have possible direction!

What we mean by direction is simply this. From the daily scale, we can see price has closed above a weekly swap level (see above). A move like this takes a lot of money which very few retail traders possess, so this was likely a move made by pro money. That - coupled with a clear break of 1.5000 on the 4hr timeframe tells us higher prices may be in store. This is all well and good knowing this, but how could we take advantage of it? Entering long now at current prices is out of the question for us, we’ve never made good breakout traders. That being the case, our main focus for today will be watching 1.5000 for a potential retest. Assuming price reaches here and we find an entry, our ultimate take-profit target will likely be placed at the 4hr Quasimodo resistance level at 1.5136. Nonetheless, take note of the monthly timeframe – we’re at supply, so any long position taken on this pair ought to closely monitored.

Current buy/sell orders:

• Buy orders: 1.5000 (Predicative stop-loss orders seen at: dependent on where one confirms this level).

• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

Thanks,
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