Richard Perry
Independent Analyst
GBP/USD
Cable continues to trade in a tight range. A string of uncertain candles in the past few sessions has finally seen the market begin to settle down. In a period of four days, trading has been between $1.2250/$1.2485 as the candlesticks have become increasingly indecisive (with small real bodies). There is still a slight positive bias to daily momentum indicators (with Stochastics and MACD lines still pulling higher), but with RSI moderating around 50, the steam has been let out of the rally. There has also been a significant reduction in daily volatility in recent sessions, with Average True Range falling from 350 pips back to 300 pips today. It would suggest that once the consolidation is broken, then the potential move could be sharp and decisive. We still look towards trading a breakout of this range and the hourly chart shows that $1.2300 pivot (which is also the 50% Fib on the daily chart) is the real basis of support to watch today. A decisive break of $1.2300 (preferably a closing break would be a downside break and imply -185 pips. However, for now, this is a waiting game (perhaps for payrolls but also the services PMIs could play a key role). The hourly chart indicators are almost dead flat. Above $1.2485 implies +185 pips towards $1.2670. This all suggests it be prudent to be cautious near term and wait for the next signal.
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