Cable hits a high of 1.2308, nears the 27 August high of 1.2310
Now, this is where things start getting really interesting for cable and the pound. Are markets that confident about lawmakers being able to avert a no-deal Brexit?
The test of the swing region around 1.2290-10 is going to be a big tell about how traders will be positioned as we navigate through proceedings in the House of Lords.
Any further break beyond here sees little resistance before we reach 1.24-25 levels and that really opens up a big gap in terms of traders pricing out risks of a no-deal Brexit.
I’m still not entirely convinced that we’ve steered clear of any no-deal Brexit risks as there is still the European Union side of the equation to deal with as well as risks of a potential election or the Brexit bill failing to be turned into law.
As mentioned earlier, this would be a good area to look for shorts with a tight stop – from a technical perspective – but upon a break higher, it’s all about sentiment thereafter.
Here’s a look at the daily chart:
As seen there, a break above the 1.2310 level will see cable rise to five-week highs and leave little room in the way of a move potentially towards 1.2500. As the short squeeze continues to the upside beyond here, I wouldn’t want to be one standing in the way just yet until political developments warrant for such a move.