ICmarkets
Long

Our take on Cable...

FX:GBPUSD   British Pound/U.S. Dollar
290 0 5
Weekly view: Pound Sterling             suffered a rather nasty drop last week losing around 350 pips at the close (1.5172), which ended with price piercing demand coming in at 1.5169-1.5260. As can be seen, just beneath this area sits a channel support line (1.4564), followed closely by demand taken from 1.4855-1.5052. Given the fact that the current demand is likely weak now (see above in bold), we believe Cable will drill a little lower to either of the above said areas before any noteworthy correction takes place. It will be interesting to see what the lower timeframes have to offer…

Weekly levels to watch this week fall in at: 1.5169-1.5260/channel support (1.4564)/ 1.4855-1.5052.

Daily view: Following the indecision candle printed during Thursday’s trade off the back of a descending channel support (1.5329), price continued to drive lower into Friday’s session, pushing this market into the jaws of demand at 1.5088-1.5173. Even though this area appears firm, there’s a strong possibility that this zone will be tested further this week since the aforementioned weekly channel support converges with the lower limits of this area (see above). Therefore, a reaction is highly likely from this zone, only a little deeper than the previous two touches seen at 1.5178/1.5162 back in June and early September.

Daily levels to watch this week fall in at: 1.5088-1.5173.

4hr view: As is evident from the chart, our pending buy order taken at 1.5188 was stopped on a fakeout below demand at 1.5162-1.5187 mid-way through London trade. Following this fake lower, little development was seen from here as near-term psychological resistance 1.5200 held strong going into the close.

This morning’s open 1.5179, however, has so far seen a relatively steady flow of bids hit the line, pushing this pair back up to the jaws of 1.5200. Given this – coupled with our analysis above, where do we see this market heading to today and possibly into the week? Well, of course, there is a chance the buyers could continue to push this market higher today and reach 1.5250, or even possibly 1.5300 given enough time. This could be something to keep an eye on today as there may be a chance to play for an intraday retest of 1.5200 up to the above said numbers.

Be that as it may, taking into account the higher timeframe structure (see above), we still favor lower prices before this pair sees any noticeable advance north. With that being said, the 4hr swap (support) level seen just below at 1.5114 is a barrier we believe to be a perfect buy zone to have on one’s radar for (confirmed) buying opportunities today/this week. The reason being is that It merges not only with the lower limits of daily demand mentioned above at 1.5088-1.5173, but also with the aforementioned weekly channel support, making it a very high-probability turning point in this market.

Levels to watch/ live orders:

• Buys: Watch for offers at 1.5200 to be consumed and then look to enter on any retest seen at this number (confirmation required) 1.5114 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
• Sells: Flat (Stop loss: N/A).

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