Hey guys! If you’re watching Cable’s charts like I am, then you’ve probably noticed that it’s testing major resistance levels right now.
GBP/USD is trading just above the 1.3000 major psychological handle, which also above the top weekly ATR, 200 SMA, and the descending channel resistance on the daily chart.
The last few candlesticks are showing indecision so it would be interesting to see where the pound would go next.
Does the fact that it’s trading above key resistance levels means that the bulls are just gearing up for a move higher? Or will this “breakout” go the way of the bullish move a few weeks ago and eventually drag the pair back to the downtrend?
There are certainly points in favor of another bullish move. For one thing, market bees are buzzing that there are now enough MPs across the House of Commons to force Theresa May to delay Brexit rather than let the PM go through with a “no deal” Brexit plan.
Meanwhile, a bunch of FOMC members are scheduled to share their two cents today. Based on the meeting minutes printed earlier this week, the gang is in favor of pausing its rate hike streak to make allowances for the “risks and uncertainties” that they see.
This doesn’t mean that a bullish move is guaranteed, however. If PM May insists on keeping a “no deal” Brexit on the table, then she could face more opposition among her fellow lawmakers, enough to have a hard time getting support for whatever new deal she gets.
President Trump is also set to meet with China’s Vice Premier Liu He today. Word around is that both sides are now drafting memoranda of understanding on proposed Chinese reforms. If true, this lessens the possibility of the trade war resuming by early March.
For now, I’m staying in the sidelines until GBP/USD shows momentum in either direction. Specifically, I’ll wait for a pop above the January highs before I enter long trades, and wait for it to trade below the 200 SMA if I’m taking a bearish trade.
What do you think? Got any biases on this pair?
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