Time For a Long Term Play in Cable, No the Other One

• Posted by Greg Harmon
• on July 10th, 2014

The currency pair US Dollar vs Pound Sterling got its nickname, Cable, in the old days of trading when the only way to trade it was via a cable under the Atlantic. Cool story. Check it out if you are young to see if I am telling the truth. But if you are just interested in trading it and making money then you can look for yourself. The monthly chart of the ETF for the pair, $FXB, highlights 2 distinct features. First, the devaluation from 211 to 136, and the second, the 5 year consolidation between roughly 155 and 165. It is this second feature that is signaling a possible long term trade opportunity. The price is moving through the prior high from August 2009 with support for a continued upward move from 3 indicators. The momentum indicators, RSI and MACD are both bullish and rising.

The Bollinger bands are opening to the upside as well. A fourth may be the moving averages starting to turn up. With the 5 year consolidation between two technical levels, the 23.6% and 38.2% retracement of the downward move it has been considered a weak bounce. But a move higher now would target the 61.8% Fibonacci level at 182.65 or higher. Are you ready for a Cable trade?

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