Early last week the cable, similarly to the Euro, followed though with its previous weeks bullish momentum; however the latter part of the week saw the bears once again gain control of this market pushing the price back down to the both psychological and technical support level of 1.60.
Since the start of February when we saw the sterling break 1.6, the market has done very little other than chop around in a tight range with 1.6 holding as strong support despite numerous attempts to break back down. With each bounce lower we see a push back higher towards 1.63 and last week 1.64, however we’ve yet to see a confirmed break out of this range.
With almost 2 months of chop and little direction in this market it is just a matter of time before cable finally breaks either higher or lower and gives a clearer indication as to where we will see the pair go in coming months.
Late last Friday we saw the market falling back towards the 1.6 area which yet again held up as solid support. The next area of support is between 1.5960 – 1.5975 which are ‘spikes’ below 1.6. Further support sits at 1.59 and any pull backs towards these areas could be seen as opportunities to buy back into the market with the potential to ride a trade back towards the upper end of the range.
With the 1.6 holding as such a solid support and the close on Friday, the early part of this week may provide longing opportunities should we see further rejections at 1.6 with strong price action supporting any buy trades.
Should we see the market continue to fall and break the 1.58 area we could assume we’re in for further losses and sell on any pull backs higher initially targeting 1.56 with further targets at 1.5350 (December lows).
Its important to remember we will not be ‘jumping’ into any trades at the levels/areas we’ve mentioned and will be looking for price action set ups before entering this market.
