From 2009 cable has been in a tightening formation, black lines. Retracement lines calculated from the gains posted in 2009 have proved to be of interest in recent years, particularly the 50% level through 2012, red lines.
RSI over this period has stayed above the 40 level, in bull trends the RSI tends to find support from the 40 area, not the more standard 30 oversold level seen in trading ranges. So the fact that 40 seems to have been a buying area in recent years does give a bullish edge to the longer term outlook.
However in the nearer term cable has just broken the 38.2% level and the lower trend line, black line, if confirmed ideally with next week’s candle also breaking lower, then yet another retest of the 50% level at 1.5356 seems likely. But as the RSI again seems to be finding support off 40, the green line, we expect traders to stay cautious until there is clearer confirmation.
In summary then, the long term outlook seems to have a bullish angle to the current tightening range, due to the RSI. But the price has just broken lower and this needs to be confirmed before we turned more outright negative. Even a break lower would ‘only’ open downside targets to the significant support seen at 1.5356.