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Cable Bears Could Be Looking Tired

06 February 2009

After a powerful move down in GBP/USD, without much respite, there are one or two interesting features that could be suggesting that bears are getting tired.

WEEKLY CHART: The two things to note here are
1. The structure of the chart seems to have changed since Dec – it has taken on the classic appearance of a final leg
2. There is currently a nice positive divergence on the RSI, which suggests bear fatigue creeping in.

DAILY CHART: In Jan, there was a bear break of sloping support, but it did not extend far. And now, the s/term recovery back above this line, as well as the two correction lows of 1.4353/1.4468, has negated that bear signal. At this stage a recovery through the falling resistance line just below 1.5000 would indicate a likely reversal in progress. Further confirmation would then come from a break above the 1.5372 08-Jan high.
A bull signal has not been given yet, but we must be ready for one.

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