The cable rejected at 20Dsma at yesterday's session again falling below 50Dsma but managed to close above 200Dema. It was the 5th consecutive day in a row when the cable has been consolidating with lower lows.
We can observe a wide divergence between ECB and BOE polices. But both the Fed and BoE appointed their rate hikes sometime this year. The UK and US have been implementing QE for almost six years. Traders wish to buy the pound on dips but not the euro.
According to Bank of England Governor Carney, it may become clearer when to start raising interest rates at the end. British economy still faces obstacles fiscal reform.
Amid recent developments, the cable remains in consolidation mode in the near term; it is likely to re-test 1.5500 or 1.5450. The cable has been moving towards higher lows and higher highs in the daily and four-hour charts.
Earlier in July, the cable broke the 20Dsma, but failed to close above that line. It seems that the near-term activity was capped at 1.5700. A strong close above 1.5600 20Dsma is likely to remove bulls back on track to 1.5670 initially and to 1.5700 later. In this case, gates to 1.5800 will be open. The cable broke the 3-month ascending trendline. It failed to close above it. These are few factors supporting the near-term bearish view as a low of 1.5530 was reached.
The 50Wsma is seen at 1.5600, and the 20Wsma is found at 1.5270.
Bulls: The cable posted a break from the bullish broadening wedge, closing above that line. The trend favors buying on dips with sl 1.5450. The 50Dsma is found at 1.5560, and 100Dema is found at 1.5450.
Intraday support is found at 1.5550. Resistance is seen at 1.5575 and 1.5600. At yesterday's session, the cable hit a low at 1.5530. Intraday key support to watch is at 1.5500. Selling is expected to accelerate below this level towards 1.5470 and 1.5450 during a day.
The cable has been managing to hold the neck line. It is unlikely to go further to 1.5450. Safe selling is available below 1.5520 with targets at 1.5500, 1.5485, and 1.5450.
Intraday buying is available above 1.5575 with targets at 1.5590, 1.5600, and 1.5615 favoring risky traders. Strong bullish momentum is seen above 1.5630 towards 1.5650 and 1.5675.
We remain bullish in the long term.