Cable stalled out today just ahead of the 200-day moving average (1.5708) following three days of gains. The pair has been on a powerful run since late May when support at 1.5000 enticed buyers. GBP/USD has now gained in 8 of the past 11 sessions for a cumulative 637 pips.
The chart shows a number of interesting formations, beyond the key test of the 200-dma. In the day ahead, the 55-day moving average is likely to cross above the 100-day which is a bullish signal. When the pair previously crossed over (negatively) on Jan 11, it led to a 13-cent decline.
If the 200-day moving average breaks, look to the 61.8% retracement at 1.5789.
I see two potential trades.
- Sell here with a stop above the 200dma
- Buy above the 200-dma for a further 50-60 rally
The main calendar risk is the US retail sales report tomorrow, watch out for a slide below 1.5600 if the figures are strong.