GBPUSD Nearing An Important Level

A stronger than expected UK core CPI print has seen Cable trade above the top end of the month-long range at 1.5700. A daily close above 1.5700 would seemingly be very bullish for the exchange rate, however, the key level for us looks to be a little bit higher at 1.5780 as this marks the 2/1 Gann angle line of the 2014 high. The 2/1 line was considered the most important angle drawn by Gann on his charts as generally speaking he believed a market was in a downtrend when below it. He also believed that a 2/1 line drawn from an important high should provide major resistance for a market and when broken signals an important reversal. As such, 1.5780 should prove pivotal over coming sessions as a failure near there would confirm that the broader downtrend remains firmly intact. A daily close above the line, on the other hand, would make us seriously question the resolve of the primary downtrend and open the way for a more important advance north of 1.5900. You can also see the divergence between ROC & price action back in May & June which resulted in a nice short opportunity as price neared the 2/1 line.

With all that said we will wait to see how this pair trades around the 1.5780 level. A close above will result in a buying opportunity while such failure may result in a shorting opportunity as this is a very important level.