Technical Analysis

Cable backs off after working into key resistance ranges, recent Brexit developments awaited

GBP/USD slips to a low of 1.3054 on the session

GBP/USD D1 24-01-19
The excessive posted earlier right now was 1.3094 and worth bumped into some key resistance ranges on the every day chart earlier than backing off now in direction of the lows. The 200-day MA (blue line) is probably the most evident as worth has not firmly damaged above the extent since falling under it in Might final yr. A break and maintain above the extent would see consumers flip the momentum/bias within the pair to being extra bullish.

Simply above it round 1.3085 is the trendline resistance stemming from June final yr. That may be a stage that’s serving to so as to add an additional line of protection for sellers at this time limit. Regardless of some draw back strain seen within the pound to start out the day, dip consumers are notably ready to pounce nearer to 1.3000.

Markets are seemingly satisfied that possibilities of a no-deal Brexit consequence are diminishing and if the European Union is not eager on the concept of extending Article 50 or renegotiating the withdrawal settlement, it is trying like a second referendum will be the most definitely consequence that may materialise at this level.

The pound is quietly optimistic over the previous few weeks and there’s good cause for that given how Brexit developments are going. Nonetheless, with 1/three of Theresa Might’s Cupboard in Davos this week, I’d anticipate recent developments to solely come about subsequent week.

Given the circumstance, I’d anticipate the important thing resistance ranges right here in addition to these round 1.3150-75 (November highs) after which 1.3258 (October excessive) to additionally play a component in limiting good points. Ought to cable begin seeing a break above the 200-day MA and above the September excessive of 1.3298, it is not onerous to see it working in direction of 1.3500 and past.

However as talked about, these breaks will doubtless solely come after we see some recent developments within the Brexit rhetoric; in any other case, it is a case of discovering alternatives to fade rallies constructed on false optimism.

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