After posting a higher low in March and then trading through key moving averages in both spot and RSI, our bias for GBPSEK, as shown in the Trend Table, turned to bullish.
Last week’s solid move confirmed that new trend and demand has accelerated this week with the general improvement in investor sentiment towards sterling. Importantly though this upside is testing a Marabuzo line created 18 weeks ago and, we feel, this point may be a tough level to crack, on a closing basis, first time around.
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The relevance of Marabuzo lines and the impact they often have in this cross can be gauged by the first one shown on the chart below. That line was drawn after the strong bounce from January’s low. Immediate subsequent price action did not attract enough sellers to even test the level. But later, in March, a setback from the spot moving average saw an attempt, over 2 weeks, to break back below the Marabuzo line. That failed and lead to a higher low and the current sequence of 5 higher weekly lows.
The 2nd Marabuzo line was created 3 weeks ago and was unsuccessfully tested the following week.
This makes us wary of current levels, in the immediate term, and suggesting that it may be wise to lighten long positions, though it’s important to note that there is no sell signal.
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