GBP/USD: Incredible turnaround in cable's prospect – Recovery continues [Video]

GBP/USD

The recovery on Cable continues. Since the market bounced off $1.2160 last week, there have now been six positive closes in the past seven sessions. Moving decisively clear of the mid-range resistance $1.2360/$1.2465 the market is on the way towards a test of the range highs again at $1.2645. This is an incredible turnaround considering less than two weeks ago Cable was looking at the prospect of $1.20 big figure. Such has been the momentum of this rally we are now looking at strong RSI and Stochastics. The 14 day RSI is into the mid-60s now and is at its strongest since December. It is all set up for a test of the key April highs of $1.2645 now. We are still mindful of the consistent swing tendencies of Cable, where the previous two and a half week sell-off has been followed by a rally now two and a half weeks old. Subsequently, whilst $1.2645 is a target to be eyed, we watch for warning signs of exhaustion on the hourly chart. The rising 21 hour moving average has supported the run throughout the past few sessions. The hourly RSI has been above 40 for the past week. Breaking these conditions would be a warning. The hourly MACD and Stochastics lines are just beginning to threaten negative divergences too. Given the history of Cable ranging within $1.2075/$1.2645 it might be wise to take caution on long positions around these levels.