GBP/USD: Cable starts to lose the strength of the bull move [Video]
|GBP/USD
A key moment for the rally is approaching. An impressive run of positive candles has seen Cable now within striking distance of the $1.2645 key April highs. Momentum is strong with the move with the RSI into the mid-60s and Stochastics strong above 80. However, looking under the bonnet there are a few concerns that this bull run may be running out of steam. We have discussed recently the consistent waves of buying and selling seen through Cable in recent months, with the latest bull move of two and a half weeks now equal to that of the previous sell-off. As the market has ticked slightly lower today, we see momentum indicators just starting to lose their strength of the bull move. Looking at the hourly chart, the move is losing impetus too, with hourly RSI, MACD and Stochastics beginning to tail off with negative divergences appearing. A negative divergence is not an explicit sell signal but serves as a warning that the trend is maturing. The support band $1.2525/$1.2550 now needs to be watched as a decisive breach, in conjunction with these negative divergences on the hourly chart could induce another retracement within the $1.2075/$1.2645 range. The mid-range old levels $1.2360 and $1.2465 then come back into play. Initial resistance is at yesterday’s high of $1.2615 now.
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