CCY Corner: #GBPUSD Divergence, Sentiments & Momentum

The near term weakness in the USD after softening reports on the US economy have finally given long remaining short-sellers on the Pound to cover positions. As Cable prices have started to recover from its lower levels, speculative sentiments contrary to price and volume have lagged behind when last week's volume slightly measured above its moving average volumes of transaction.

Speculative sentiments have fallen to negative territory while prices have recovered simply based from the Hawkish BoE minutes directing a favorable reaction for Cable prices to move to its current levels @1.5180 which also serves as the initial point of daily price resistance on the Asian session before another push higher can take place.

Meanwhile, a visible divergence have occurred when prices reached its lowest level @1.4565. Momentum and volumes relatively were lower and an unconvincing gradual buildup of prices from short-covering have supported the recent move on the Pound. Asian trading opening were mildly soft across the board and have remained within the day's range. However, a further increase in market would continue to prevail for Cable, as prices would still swing higher with some session pullbacks to come with it. For as long as the US Dollar would continue it's corrective move; the tech perspective on GBPUSD would be a continued V formation that would signify a positive tone moving forward, especially if no considerable change in direction with its corresponding EURGBP Cross rate would be made. This divergence would affect the EURUSD and the AUDUSD more effectedly as the US Dollar declines. 

Reference Trade in Effect

GBPUSD as of April 15, 2015 

GBPUSD_EURGBP DIVERGENT TREND

A Cipher3 Applied Analysis & a Combination of a Counter-trade Strategy