Cable Could Be Carving Out Its Low For The Year
|Despite the turmoil of UK politics and never-ending cycle of Brexit headlines, price action suggests GBP/USD could continue to strengthen.
Starting with the weekly chart, we note a bullish pinbar candle failed to close beneath 1.2589 low provide a bear-trap at the multi-month lows. As the pinbar coincides with a bullish RSI divergence it warns of a bullish reversal and highlights a loss of bearish momentum. Furthermore, GBP/USD is on track for a monthly bullish engulfing candle and the bearish trendline form the 2018 high has been invalidated, adding further weight to the reversal argument.
Switching to the daily chart, two bullish pinbars have formed prominent higher lows. As yesterday closed firmly above 1.2928 resistance to a 2-month high, we’re now looking for prices to find stability before the next leg higher. Whilst structural highs at 1.3072 and 1.3175 make the reward to risk undesirable on the daily chart, we suggest traders seek bullish setups on lower timeframes in line with dominant momentum. A break below 1.2928 warns of a deeper correction, yet the trend remains bullish whilst above the 1.2669 low. And, as we’re looking at the potential for GBP to have troughed, it could find itself headed for the 1.3299 highs and beyond if the trend is allowed to develop.
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