Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Towards the end of last year we highlighted a key trendline resistance in GBPUSD. This trendline, drawn off the 2007 high, had remained intact until December where it was breached following a move above 1.3372. A strong monthly close in December reinforced the bullish breakout and so far this year, price has remained above the trendline - it currently intersects at 1.3322. These developments highlight a reversal of the downtrend that has been in place since the Nov 2007 highs.
With a bullish price structure in place, attention turns to the 1.4000 handle and more importantly resistance at 1.4377, the April 2018 highs. A break of 1.4377 would strengthen a medium-term bullish case and signal scope for an extension of the current 10-month rally that started off the Mar 2020 low. This would pave the way for strength towards 1.5136, the 38.2% retracement of the 2007-20 downtrend.
Additional technical developments that support the likelihood of Cable appreciating are: The USD is in a medium-term downtrend and general USD weakness suggests Cable is likely to remain firm. On both the weekly and daily frequencies, a clear bullish price sequence of higher highs and higher lows. Is evident. Daily moving average studies are in a bull mode.
Looking at the monthly chart, initial firm support lies at 1.3322, the former trendline resistance. In February, the trendline reference will be 1.3273. A return below the trendline would represent a concern for bulls. A bearish monthly close below the trendline would suggest the December break is potentially a false one. Key support though is at 1.2676, the Sep 30 low. Support levels to watch ahead of 1.2676 are:
SUP 1: 1.3452 Jan 11 low
SUP 2: 1.3135 Dec 11 low, 2020
SUP 3: 1.2855 Nov 2 low, 2020
To conclude, trend conditions in Cable are bullish. The recent trendline break highlights an important shift in sentiment. Furthermore, the trendline continues to play a key role in assessing recent developments.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.