Despite consensus opinion, noise, very crowded trade about the strong US dollar and seven months of steady appreciation, the tone is changing slightly. We spotted this earlier in the US dollar index and the Australian dollar. With cable, the trade over the past month has formed a gentle rounded bottom, also known as a saucer. It hints that the trend since July is about to correct; perhaps reverse. Monetary and economic dynamics in these two units are not that dissimilar, so this might be a good barometer for sentiment over the next three months. Cable should rally to US$1.545-US$1.55 in the short term and maybe US$1.58 in the first quarter of this year.
