GBPUSD still keeps its bearish short-term trend even after the bounce from 1.3760
The pound is certainly still holding some volatility and that’s evident from the bounce from mid-1.37. Today, we’ve had a crack at 1.3900 but couldn’t keep the gain above and have since fallen back. The day’s high at 1.3924 comes right on a prior S&R point, and holding below that and the descending trendline, keeps this bearish phase alive.
If we do break above the 1.3920 area properly, and that trendline, there’s further resistance possible into 1.3940/45, 1.3975/80 and stronger at 1.3990/1.4000. A break above 1.4000 would likely be the catalyst for another run up towards the year’s highs.
Down below, the support around 1.3830/35 is gathering strength again and the level is acting very pivotal when we’re there.
I’m still bearish on cable but I fully understand this bounce coming after quite a volatile move down. I’m tempted to short another test and failure of 1.3920 with a tight stop just over the next resistance point around 1.3940/45 but other than that 1.40 would be my next choice for shorts, depending on the reasons why we move there.
There’s a lot of focus coming in on Theresa May’s speech on Saturday, and we have a raft of government speakers lined up over the next couple of weeks. Boris Johnson will be speaking tomorrow. I can’t see any of them pulling a rabbit out of the hat so it’s likely that any positive vibes that lift the quid will be sold into swiftly. Some in the market may be looking for another “Florence” performance from May and if they don’t get one, that will be another reason to hit the sell button. With her first speech happening at the weekend, the market will at least have a day or so to chew over it before markets re-open. If it’s seen as bad, at least we know which way it will go.
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