Technical Tools

Support and resistance (S/R). Price levels, trendlines and Fibonacci retracements. Price action, candlestick and chart patterns. Simple moving averages (SMA). Commitments of traders (COT) indicator, which displays speculative positioning in FX futures market, used as a proxy for speculative positioning in spot FX market.

Weekly Chart


Cable broke 2015 low in the first trading week of the year. The pair bounced off of the support line that connects 2004, 2005, 2011 and 2013 lows several times but it haven't managed to get past the support-turned-resistance near 1.4550. Five cent range between 1.40 and 1.45 remains in play.

Speculative Positioning

Speculators have been net short British Pound Sterling futures contract since November last year. Net positioning indicator is becoming extended as it is approaching 2013 lows though there's still some room for potential sellers.

Daily Chart


The pair properly busted stops below 1.40 level before reversing sharply and touching 1.45 three weeks later. Hedging supply at that level has got demand in check as the pair consolidated below 100 day SMA. The pair has become increasingly perky in recent days - a retest of 1.45 and perhaps 1.4750 may not be off the table.

Fundamentals

While the Fed kept their promise and lifted rates for the first time after almost a decade, BOE have been postponing their own lift-off for months before they finally admitted that "this is not the time to raise rates". Uncertainty surrounding the referendum on U.K. membership in E.U. and has been weighing on the pair too.

Prediction

Taking into account all the above-mentioned factors, I expect the pair to be trading near 1.4375 towards the end of the forecast period which will conclude on the 1st of June, 2016, at 12:00 GMT. Ideally, the pair will follow the expected price path as outlined on the charts.
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