GBP crosses/Technical Analysis/Trade Ideas

Cable trade idea: Sell into technical resistance

     The EUR/USD rally on Friday was sort of understandable in that the market was short and engaged in short-covering ahead of a significant risk event. The fact that cable rallied strongly alongside is less logical and the technical picture does seem to be offering up some potentially good risk-reward trade opportunities.

The recent down-move from 1.6310 is approaching it’s 50% retracement level at 1.6060 which is also roughly where the 55-day MA sits. The bearish trendline is also sitting just above there near 1.6090.

I’ve been running a small short position here in recent weeks and I am looking to add between 1.6060/90. I will start reducing again above 1.6130ish.

  1. For EURUSD it was EUR short covering along with USD sell off but for GBPUSD It was more of USD sell off than GBP buying ( as per GBP index).

    In broader time frame, USD Index is at 50% retracement of the move down from 01/06/12 to 15/09/12 and facing stiff resistance moving higher. If it gets through, approaching 61.8 % could prove a turning point as daily RSI will be posting above 70% as well.

    (GBP Index is in consolidation / neutral / range mode ) for over 3 months now with no direction!!!!

    So this makes me neutral / bullish GBPUSD in medium to long term and I am skeptic for break of 1.5800 barrier and rather expecting a range from 1.5850 to 1.6300 or leg above…

    I adopted GBPUSD short strategy mentioned last week and went long at 1.05850 (with intentions of building short positions as advised) but now, I am neutral so its buying and selling equally (swing / ranges) until pair get out from one or another side!!!!!!!!!!!!!!!!!!!!!!!!!!

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