Cable breaks out of 2-decade range

[notouch]

I thinks it's worth starting a new thread on this subject because GBP/USD just broke above 2.01, which is it's high from 1992. That's not something you see very often. A breakout of a range is often followed by a big continuation trend. So where's the next resistance for Cable? The chart below suggests there's still a very long way to go - 4000 pips until the all time high. On the other hand it might be a fakeout and come straight back down.

[milliard]

Fundamentals are still strong on the British currency, with desks now pricing in a May (& possible 3rd Q) hike.

The pullbacks will be eyed very carefully indeed & now the big psycho level has broken, I wouldn't be surprised to see activity touted to 2.04/05 before any real headwind.

[torero]

I don´t plan to get in until the pullback is finished. Very nice move in last 2 days though. I target the move to 2.05 from the rectangle formation beneath the breakout.

[notouch]

Good point milliard but the Bank of England is still expecting inflation to come back to its target by the end of the year so this breakout could be the peak and the start of a long down move. Price appears to have been rejected this morning above 2.01. A bearish daily candlestick would signal a good swing short.

Torero - care to post a chart of the rectangle formation? It would be interesting.

[torero]

I miscalculated. It's supposed to be 2.06. London has been selling all morning since the close of Tokyo.

[notouch]

Interesting chart torero. Here's the way I see it right now but not with enough confidence to take the trade right now. I'm looking for more confirmation that we've reached the top.

[milliard]

It's mostly going to be a psychological battle on the first couple attempts to scale & hold this important hill.

The pivot followers are eyeing recent range (month R1) penetration @ 1.9875 & the stall up here @ R2.

2.0072-75 is a dual monthly/weekly R2 on the map & price has tickboxed these larger range pivots pretty well since 1.7600.

The b/o range top (to bottom support) looks a likely magnet on aggressive & nervous retracement activity if protective Cable Bull pullback activity fails to prop it.

I guess we'll soon see how spooked the fast money players really are should the buck sniff a little blood.

[PYenner]

Most of the Major pairs have topped last years highs.
Expecting this coming week to complete the rise that started last week.
For now the only indication is upwards, but as the man says, when will it become a fakeout?

The market is driven by confidence, but misplaced confidence is how you lose.
Speculators are said to be losing $12M/day???
So the banks have every good reason to flag one direction then send the price the other way.

My best quess is that prices will stay high and threaten or promise to go either way, the good cop/bad cop tactic that turns the sucker into putty.
Expect your confidence to be tested with drawdown swings.
The stakes seem higher than usual to me, ugly stuff coming.
Not a good time to be overtrading or low on equity.

[torero]

Best is to sit out until the pullback is done. Else, scalp the pullback. I'm sitting out for quite a while now.

[PYenner]

Yes, buy only the bigger dips and get out a bit early.

re 1992 record high
The Euro is now in tow and looks to have found its slot in the market.
The balast of the Euro should lessen extremes in Cable.
I think the last year is as far back as we can look, thanks to the Euro.

Last year prices hung around the high longer than I like and look like they didn't know which way to go. If we get that this year, scalping the PY dips might be the main option, while looking for a way to predict GBPUSD swings without committing financial suicide.

Some of the Swiss pairs might be an easier target than GBPUSD prediction but the range is smaller.

CHFJPY and GBPCHF follow or "trade in" PY but not in EU.
USDCHF and EURCHF follow or "trade in" EU but not in PY.
GBPUSD follows or "trades in" both PY and EU which makes it damn tricky to predict.

PY and EU are both headed up a notch together, which is one time you can "rely" on GBPUSD to make a good upswing, but it is less common.
What you get is like the last two days, half way there and the banks start playing 100 pip tennis with the PY price instead of firing off GBPUSD as the final stage in trading both PY and EU up together.
Makes it difficult to pick an entry price or time, what you get is days of swaps and drawdown if you get it mistimed. Big prize, big risk, sucker trap if you don't have a well thought out plan.

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But if you eat like an elephant and poop like a bird aren't you gunna... explode?!