Cable bounces around key near-term levels so far on the day, what to look out for?
GBP/USD plays ping pong with its key hourly moving averages today
The drop yesterday saw cable move towards its 200-hour MA (blue line) and buyers kept a defense of the near-term level into trading today.
As the dollar weakened earlier, the pair moved towards a test of its 100-hour MA (red line) but sellers held firm and that is leading the pair lower now towards just under 1.2900.
But the 200-hour MA @ 1.2882 is still largely intact and that is seeing the near-term bias keep more neutral on the session. This shows that the key near-term technical levels are still being respected as buyers and sellers are still battling it out on the day.
The pound is still largely dogged by some hints of Brexit pessimism and that in my view, that is helping to keep the pair under 1.3000 – which is a key line in the sand for any major upside breakout in the pound.
However, buyers have been resilient as well and are maintaining some hope that the UK and EU will come to some form of compromise. Hence, we have seen cable keep higher in part because of that over the past week or so and staying above 1.2800.
The dollar side of the equation is also part of that story as we see the greenback ease to start the week before recovering some ground in trading yesterday.
But the dollar is retracing some of its overnight gains as US futures are keeping in positive territory so far to start the day.
Again, the key hourly moving averages are the key focus in terms of near-term direction for the pair now. A break on either side will allow room for either buyers or sellers to try and build more momentum in the session ahead.
For any upside break above the 100-hour MA @ 1.2927, the 1.3000 handle is still going to offer some added resistance if we do push higher from here.
As for any downside momentum, look towards the 1.2800 level and then the 100-day moving average at 1.2787. Those will be the key support levels to watch with buyers expected to at least put up some defense on the way down.
Looking at the fundamentals, it is still all about Brexit headlines for the pound and there is certainly no guessing what may come next.
Meanwhile, the dollar side of the equation hinges on US stimulus talks but that is unlikely to go nowhere for now; though the market is still holding on to some hope.
Source: Technical analysis