Cable looks towards test of 200-hour moving average as Brexit deal optimism picks up


  • share

GBP/USD buyers look to regain near-term control


ForexLive

The pound is looking perky again today but I’m arguing the case that the upside move in GBP/USD also has part to do with short squeezes seen elsewhere. In particular, the best performing currencies today are the ones which see short positions most stretched i.e. aussie, kiwi, pound. As a result, the dollar is suffering across the board.
A couple of headlines and a large move or two — coupled with some stability in equities — is enough to get markets to shake off the nervous and jittery tones over the past few weeks. And that’s what we’re seeing now.
For GBP/USD, it’s all about Brexit still and it was very much headline trading since overnight after Raab kicked things off with this one here. The headline provided little context of what the words actually meant and that sent algos popping as the pound was driven higher (the spike above the trendline resistance circled) but alas, the gains didn’t last as the contents didn’t quite match the headline.
It was a good fade trade but it was a hint that pound buyers are looking for any opportunities for a good jump higher and after this report here by the FT, the pound kept with that tone and continues to move higher now.
Price now looks towards a test of the 200-hour MA (blue line) and if buyers can hold a break above that, the near-term bias turns more bullish. The break of the resistance trendline is a key one in my view and will help to provide buyers with more confidence, but it’s still about Brexit headlines right now.
There’s hints of optimism that a deal is coming but the details are still very murky and there isn’t anything convincing just yet. But considering how much negativity has been priced in and how traders are reacting (short squeeze), positioning suggests that the pound’s upside may last for a while longer as selling reaches near stretched levels.
I’d be more convinced of a further upside once the 200-hour MA breaks. Until then, I’m still quite wary of any further upside without concrete Brexit progress to support it. So far, it’s been a good run by buyers but they’re not quite in near-term control just yet.
Источник

0

Комментировать

Ваш e-mail не будет опубликован.

Этот сайт использует Akismet для борьбы со спамом. Узнайте как обрабатываются ваши данные комментариев.