23 Apr GBP:USD / Cable Analysis And Key Levels 23rd April 2012
The following analysis on GBP:USD was with the intention of finding a solid conclusion as to it’s next likely direction. No solid answer was found so I wasn’t planning on posting up the details but in hindsight it maybe useful to some so here goes.
Calling Cable with confidence is never a good idea.
An upside break from this rising wedge would be exceptionally bullish, and new highs on MACD indicate there’s another higher high on price yet to come.
A powerful breakout from this 4 hourly rising wedge would signal further strength to come, but until a breakout occurs, I’m in the camp of scalping shorts from here until proven wrong.
Daily MACD Divergence signalled the previous low. If it’s going to signal a top, then a reaction must begin soon. A breakout on MACD probably indicates that this rally is in it’s early stages. A Daily close beyond 1.6170 would confirm on both price and MACD, otherwise we are likely to see similar price action to 2009 and 2011 which could set us up for 4 – 8 Months of chop followed by further declines.
Weekly chart shows a bullish engulfing right through the 200 MA, the first upside break on a candle closing basis beyond the Weekly 200 MA since 2002 !
The Quarterly chart is particularly interesting.
1.6175 has trend turning capabilities on a candle closing basis. 1.7150 offers a more sturdy resistance target.
But those congregating MA’s at the top of the current triangle are quite attractive as possible upside targets, and those Quarterly MACD crosses have almost always meant business.
In conclusion I’d say only a bearish engulfing Candle this Week (or a very convincing reversal candle) can really send Cable heading back down in the medium term, otherwise this rally has probably got legs.
Suffice to say, Cable has 4 major lower highs since 2007. Any signs of weakness at critical levels and that will continue.