Technical Analysis on GBP/USD - 19 April 2010

Comment: Disappointing as Cable drops last week’s levels. It should now try and base against the lower edge of the Ichimoku ‘cloud’ and the 26-day moving average. Futures volume is almost half March’s peak.

Strategy: Possibly attempt small longs at 1.5235; stop below 1.5130. First target 1.5350/1.5385, then 1.5525/1.5575.

A potential ‘double bottom’ at 1.4800 (61% Fibonacci retracement support) in March needs to be finished off by a weekly close above 1.5600. Until then Cable is likely to struggle with the bottom edge of another big weekly Ichimoku ‘cloud’.

Note how the Lagging Span found support at the ‘cloud’s’ lower edge of October 2009 and how this rallies at a roughly 45 degree angle for the next four months, possibly providing steady upward pressure – momentum is still a long way off being bullish though.

On the Bank of England’s Trade Weighted Index sterling remains close to record lows, as stranded UK tourists know first hand.