Sterling/Dollar Spotlight: Indicator of the Day

“INDICATOR OF THE DAY” - 20-DAY SMA
Cable has been confined to a multi-week bear channel and although the price action has been constructive over the past few days, we ultimately expect to see a resumption of the broader downtrend following the minor corrective rally.

Using ATR analysis, the current projected high in Cable today comes in by 1.4140 which falls just shy of the 20-Day SMA at 1.4160. Although the 50-Day SMA (1.4355) has done a formidable job of capping rallies throughout the downtrend, the 20-Day SMA has also been a good indicator to sell into. Given that a move to the 20-Day SMA on Friday would already have the currency well overextended on the day, we like the idea of selling at 1.4160 in anticipation of a sharp pullback from there.

Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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