Richard Perry
Independent Analyst
With this correction now well over 300 pips in under 3 weeks, I have been looking for a buy signal around the 89 day moving average for the past few days. Yesterday’s price action saw a dip below the 89 day ma and this move has continued today with Cable under further pressure. I have said that I would need to reassess my outlook on Cable if this indicator which has been an excellent basis for the medium term corrections during 2014 began to break down. I am now on the brink of changing my longer term outlook on Cable (away from sterling bullish). Momentum indicators look increasingly weak, with RSI now below 30, Stochastics very weak and MACD lines dropping below neutral. There is a significant amount of economic data due today that could mean it is a volatile day, but if Cable were to close now below yesterday’s low of $1.6855 this would be confirmation for me that the dollar bulls have scuppered the control of the sterling bulls. A retest of $1.6800 would ensue. The intraday chart shows the prospect of a recovery is far above with the falling 89 hour moving average (the basis of resistance throughout the past two weeks) up at $1.6928.
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