GBP crosses/Technical Analysis

Cable: Still in middle of it’s 4-year wedge

gbpusd1w     Hard to believe that the crazy currency pair which I started trading in 1986, and which used to see 500/600 pip daily moves, has been stuck in an ever-narrowing wedge formation for exactly 4 years now.

I have absolutely no idea which way it will go but I’m confident in predicting that 2013 will be the break out year and we will either see 1.35 or 1.85! The edges of the wedge currently sit near 1.5650/1.6450 and whilst I’m currently short of cable (only because we got near the top) I’m ready and willing to go aggressively either way once we get the break.

One pair which seems to be giving a strong GBP buy signal is GBP/JPY, so perhaps this is a signal that the break when it comes will be a bullish one? I’m not sure but lets hope we get some volatility at least in 2013!

  1. Nice to see this blog!

    Yes, we seem to be trading these 6060 and 6160 for years now! But I think the break is more like to be on the downside on the back of dollar strength than anything else. The core logic is little perverse, I expect the $ to strengthen because of the Cliff+Debt+other farces, could put global economy is some form of threat or tailspin.

    Tech wise, GBP is holding below the larger Fib levels of the big fall, might also signal this wants to go much lower.

    JMO

  2. Happy new year Sean, hope you had a good one. I would be interested to hear your thoughts on why you think this pair has settled into a moribund range over the last few years. I am always intrigued by these kind of shifts in market behaviour.

  3. Likewise Doc and all the best for 2013. I wish I knew, is it perhaps the growing retail market which has made the mkt deeper and therefore tightened the ranges? Or has the market as yet failed to grasp the consequences of all the money printing going on? Probably a bit of both but I do know it wont stay this way for long and as soon as the market decides that ‘true value’ lies elsewhere, then we will have a big run very quickly

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