Cable has been trading in a strong bullish trend almost for a month now. The bullish trend has been trading higher in a fairly tight channel, which was broken yesterday indicating possible downside. In addition to this, the pair crossed the two EMA´s I monitor on the 4-Hour chart, which give us another indication. Another thing to note on the 4-Hour time frame, is the skewed head and shoulder formation, where the neckline just got broken to the downside as well.
We do have a couple of news releases today, and one to pay attention to is Producer Price Index from UK, which is expected to come out at 0.4% compared to -0.6% previous release. A disappointment on this front could strengthen possible moves to the downside on Cable.
Based on the 4-hour chart, the current level on Cable definitely has potential as a turning point. This is confirmed by the daily chart, where the pair pulled back, all the way to the 200 EMA which is currently holding as a strong level of resistance. Another aspect is the consecutive lower lows and lower highs based on the daily timeframe. After most recent swing low on this pair, we now had a strong pullback, but recent swing high has not been taken out.
Cable is currently trading around 1.5790. I would prefer to wait for London open, pay close attention to price action and look for a possible short entry if the pair doesn’t show immediate move s to the upside.