GBP/USD: This rally needs to be treated with caution [Video]
|GBP/USD
The Cable recovery formed a third successive positive candle yesterday and is now edging above the top of a recently formed four week mini downtrend channel. Given how Cable has been forming lower highs and lower lows in recent weeks, this rally needs to be treated with caution. Momentum indicators remain correctively configured and are back around levels (on RSI and Stochastics) where selling opportunities arise. The changer to this outlook of selling into strength would be a move above $1.3015 (the late Feb rebound high), especially on a closing basis. This would effectively re-establish Cable as a medium term range play and abort the run of lower highs. Support is around the $1.2850 recent pivot, which is also the 50% Fibonacci retracement (of the $1.2193/$1.3515) level at $1.2855. Yesterday’s low at $1.2860 reflects the increasing importance of this pivot.
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