GBPUSD - Stalled at key 38% level; Temporary bounce likely

Monday’s indecisive unchanged close was followed by fresh investor selling yesterday. This took Cable to lower levels for a fourth day in succession and into the daily Ichimoku Cloud for the first time since August. It also means that prices have corrected 38 percent of the rise from May’s low but it is at this point that the downside has stalled with some profit taking developing in overnight trading. These gains are not strong but they leave intraday signals mildly positive and so our call is Temporarily Bullish above 1.5912. Confirmation will be a move through 1.5966 with further gains focusing on 1.5996, yesterday's European afternoon high, or even yesterday's 1.6028 top.

The risk is that demand is being overrated and this would be confirmed by a move under 1.5912, 38 percent of the rise from May’s low. Further downside would then target 1.5890 or even 1.5866, the open from seven weeks ago.