The volatility and liquidity today should be the same as on Friday – low. We still have holidays in many leading economies so the amount of money floating on the markets is significantly lower than usual. In this environment we still can find some decent setups. Today we would like to look a bit closer on the Cable, especially that it is a long-term occasion, which should be available for a while.
What we do have here is a symmetric triangle formation restricted with two blue lines. On Thursday, the price tested the upper line as a resistance. The test was positive for the sellers and the price draw a D1 candle with a long head and a black body on the bottom. Luckily for the buyers, traders did not follow this signal. Instead of a further decline, the price started this week with and upswing. Positive sentiment is additionally supported by the bullish wedge (black lines), which was present on the chart in the past few weeks. It is very possible that we will see another test of the resistance but this time it can result with a bullish breakout.
Why? Because there is not much that could hit the GBP in the mid-term. In our opinion the move after the referendum was exaggerated and currently the 'ultra hard Brexit' option is discounted, which should not happen. Traders were too harsh for the GBP and the Cable should slowly regain the value in the next few weeks. Bullish sentiment will be denied, once the price will come back inside the wedge formation, which for now is less probable.
