the daily chartist

Sterling shows resilience

published 2 years ago

Cable has played out the double top very well as it was sold under pressure as a result from disappointing news surrounding Brexit talks and the overall USD strength. Even with the recent gains because the news came out that London will remain Europe's financial Gateway, the currency pair is still in a downtrend. The Friday's close shows it as the bar failed to breach the upper line of the channel and the price also closed under the psychological 1.3000. Don't be fooled by DeMarker showing a turn above 0.3 in the oversold zone. This has occurred, because of the sharp impulse after the news. The dollar was also sold heavily on Thursday. The price will test the neckline for sure on its way down and it's going to be a key level. 

First scenario: Sell on Monday opening with a stop loss at 1.32500.

Second scenario: Wait for a test on the neckline and open a short after the breakout and the confirmation. 

Third scenario: Price moves up from the neckline, moving away from the down channel and towards a test for the 50 SMA and an eventual 200 SMA test for early indications that the price will continue on its correction course.