Richard Perry
Independent Analyst
GBP/USD
Trading Cable remains the biggest rollercoaster rise in major forex. The huge volatility continues to drive through the price and another day of wild swings yesterday drove a range of 330 pips. The Average True Range is 314 pips today! Two decisive positive candles in a row (and three in the past four sessions) have constructed some sort of a rebound. However, it was notable that as soon as Cable started hitting the resistance of the old September low at $1.1955 the rally began to struggle. Momentum indicators are starting to turn up, but how the market responds around the 23.6% Fibonacci retracement (of the huge $1.3200/$1.1404 sell-off) around $1.1830 today will be a near term gauge. The hourly chart shows the recovery has been tempered slightly in the past 24 hours, but hourly RSI remains above 40 which is encouraging and the hourly moving averages are showing signs of improvement. Initial support at $1.1770 will be watched this morning, whilst the higher reaction low at $1.1635 needs to hold to maintain any sense of recovery. The bulls will still be looking for a close above $1.1930 to complete a 525 pip base pattern, whilst more importantly pulling back above the resistance $1.1955/$1.2000. The immediate outlook has turned a little mixed this morning, but the building blocks of a recovery are still being laid.
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