GBP/USD. Uptrend stalling
Cable (1.5005) is down overnight, and spot appears to have stalled and be in danger of beginning a new downtrend.
Technicals:
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Trend: Daily crossing lower; Weekly higher.
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Overbought/Oversold (stochastics): Daily overbought; Weekly oversold.
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Support/Resistance Levels: Resistance lies at 1.5241 (Jul8 high), 1.5524 (Apr15 high), 1.5816 (Feb17 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.4949 (Jun12 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).
Positioning:
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The CFTC, GBP, non-commercial, net-position deteriorated modestly to -39K, presaging the stall and potential decline in spot.
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The risk reversal (3m, 25delta) is down overnight, off the highs since Feb on the decline in spot. While it remains skewed for GBP losses, it is also in the upper end of its six month range, which suggests an overbought condition.
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Implied Vol (3mo) is up overnight and off the new low since Jan traded Friday.
Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative), EUR/USD (positive), S&P500 (positive) and crude oil (positive).
