Divergence Sets The Opportunity

The $GBPUSD has finally breached the 1.6000 level even closing last week below the big psychological level. It is a level that marked the 50% Fibonacci level of the 2013 rally in cable.┬áSince Friday’s break, however, cable has managed to stage a small, corrective rally back above 1.6000 as high as 1.6130. And despite the pullback from those 1.6130 highs, there is still potential for $GBPUSD to see higher levels on this bounce.

GBPUSD DAILY CHART

This RSI divergence here on these new lows suggest that this bounce should continue higher into the Fibonacci levels. The 1.6250 level is historically a huge resistance level. Price could also get a boost higher with the release of the FOMC meeting minutes today and the Bank of England monetary policy decision tomorrow. If so, any rally higher becomes as an opportunity to set up for further weakness in cable. The RSI and data releases may give swing traders opportunity to set up at higher, more attractive levels before another push below 1.6000. Bears should be patient and bulls should not get too giddy. Trade what you see.

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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