The Pound Is Overheated
The British Pound is clearly overebought following a 2.0% rise to 1.33700 in September. By contrast, the EURUSD gained just 0.4% over the past month. Although the Cable has broken through the uptrend resistance, this appears to be a temporary move. Over the past six months, the pound has been held within an ascending channel, and it seems likely that this pattern will continue.
I plan to open a short position at 1.33500-1.34000, aiming for a trendline support at 1.31000-1.31500. This is where the pound could be heading by mid-November. A stop loss will be set at 1.36000.
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