Cable struggled again during the Wednesday session as the latest round of buying simply seems to be grinding to a halt at this point. The move lately has been to the upside, but when put into the context of the last couple of months, we aren’t even all the way back to the 38.2% retracement level form the fall yet. The pair simply has been weak, and the sudden fall over the late spring and early summer will have dictated that a rest was needed.
The pair normally functions as a barometer of global risk, and can often track the world’s major stock exchanges such as the Nikkei, NYSE, and DAX. The pair generally will rise as money comes out of the US Treasury markets and into the London Stock Exchange. (As an example.) So in other words, when the traders around the world feel that there are profits to be had, this pair rises.
The pair hasn’t been rising for a while now though – save a couple of small pullbacks. The fact that the fall has been so methodical can also be attributed to the idea that the Bank of England will be easing again, and that the United Kingdom is so heavily exposed to Europe in both exports and debt that the banks are sitting on.
1.55
The 1.55 level is currently acting as support, but the fact is that this pair has a long way to go before it can be said that it has “rebounded” and is now a safe buy. The 1.52 level below would absolutely open the floodgates for the bears if it gets broken. In fact, at that point I see another 1,000 pips to the downside eventually.
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However, in the mean time we are currently asking a lot of questions of the 1.55 level, and this will be crucial as far as I can tell. With the upcoming Greek elections over the weekend, I believe this pair will fall below that level, and I am looking to sell the pair once we are sub-1.55 for four hours.