GBPUSD Trendlines Signal Something's Got To Crack
Saxo Bank | Oct 03, 2013 10:17AM ET
We didn't find anything to trade with any sort of conviction this morning which meant no trade Idea from me. Nevertheless, things are getting to a point in Cable where something's got to give, so here are a few charts to illustrate this point.
First of all the daily chart shows the steady rise seen in recent months, which has accelerated in the last few weeks. There are two trendlines on this chart. The steeper one that defines the recent rally sits at 1.6155 right now and is moving higher by around 30 ticks per day. Below here, there's scope for a pullback to 1.5964. Below that the less steep uptrend line comes into play. This is at 1.5874 right now, moving up by 17 ticks a day.
The other thing to note on this chart is the small 'bearish divergence' on the RSI, which topped out on September 18. We have gone on to make a new high price-wise, but the indicator has not, which is sometimes a bearish sign. We await confirmation in the shape of an RSI reading below 66.
The next chart is the monthly, and shows we're coming up to a gently sloping downtrend line, which is currently at 1.6323. This chart also shows there are a number of resistance levels just above, most immediately 1.6379 and 1.6429. So this could weigh.
Let's keep an eye on these levels in the coming weeks and see how this unfolds. As I said above, something's got to give!
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