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Market View

Cable is forming a positive divergence

Wednesday, October 3, 2018 11:50 AM GMT

With just a few weeks before the UK and the EU are anticipated to finalize the Brexit deal, the FX market turns to be more sensitive to Brexit headlines. Yesterday, UK Construction PMI declined to 52.1 in September from 52.9 in August and below market expectations (52.5). The reading pointed to the slowest expansion in the construction sector in six months. Except for UK PM Theresa May speech at 12 pm GMT, today’s agenda includes US Markit Services PMI, US Markit PMI Composite, ISM Non-Manufacturing PMI, US FOMC Members Brainard and Mester Speeches, and Fed’s Powell Speech. It is expected high volatility during the session, so Traders should be cautious with their decisions.

According to the daily timeframe, the Cable is following the trendline (T1), while Stochastics is trying to escape from the oversold zone. In addition to this, 14EMA comes in confluence with 24EMA, which maybe act supportively to the pair.


Heading to H4 timeframe, the pair is creating an important positive divergence on Stochastics. Therefore, the bias may change, giving a potential buying opportunity near this area, targeting the trendline (T2).


On the other hand, a breakout of the trendline (T1) to the downside means that the setup is busted.

(EMA = Exponential Moving Average, 14 EMA = Yellow, 24 EMA = Magenta)

Always review your own analysis. If there is a confluence between this and your own strategy, then you may have even better trading setups.

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