Cable: Patience required for dip buyers
Apologies to those who I’ve confused between my postings here and in the chat-room; I will try and ensure that this doesn’t happen again.
I remain very bearish on the USD and my pair of choice for trading this view is still the cable. I was lucky enough to bail out of my medium-term longs at trend highs near 1.6250 (just for record) and am keen to buy back on dips. Remember the market always feels terrible on the way down but by Christmas I feel that sub-1.60 levels will have become a distant memory.
If the move from 1.6260 to 1.6010 was the first wave of a typical 3-wave retracement, then I would expect this second wave to run out of steam near 1.5870. This is where I will start buying (unless it’s in vertical collapse for some reason). The really strong technical support is at 1.5700/50 and that’s where I expect any falls to run into a brick wall of support.
I think it’s reasonable likely, given present momentum, that 1.6050/70 will cap in the short-term and that we will see a test of that first level at 1.5870, but as always, be sensible and wait and see what the market looks like when it gets to your level.