Cable has broken!

 I have been running a commentary on GBP/USD (cable) on MW Trader recently with my latest post today and will update the chart as the chart I took this morning is out of date already.

Bullish sentiment towards sterling has been running wild – massive GDP projections for the UK, retail sales way up, car registrations likewise, employment levels at record, rumours of BOE interest rate hikes soon – the list goes on of bullish ‘news’.

So has cable blasted above the critical 1.70 level?  Actually, no.

This must have the traders who believe the news drives the market scratching their heads in fury.  How could this happen?  Isn’t it obvious the dollar is doomed and the pound is much more healthy?

And that is how many traders think – they are not really traders, are they?  A trader is someone who absorbs the news and then observes how the market treats it and then goes with the path of least resistance.  

An amateur is someone who tries to interpret the news and trades on that basis, regardless of what the market thinks. My belief is that at the 1.70 level, all of the potentially bullish news was already in the market.

This is last week’s COT:

  Small specs added massively to long trades and large + small specs are 2-to-1 bullish.  This was a set-up for a major disappointment for them.    

Here is the hourly with my new tramlines.

Testing support now and could see a rally to kiss centre tramline.

But my main near-term target is lower tramline.