Cable Minor Downtrend Disrupts Consolidation Phase
Cable prices (GBPUSD) have collapsed yesterday and over the weekend in the low liquid environment, with historically strong indicators not working at this juncture.
Where bulls in the minor trend have halted at the stiff resistance levels of 1.2650, where hanging man, shooting star & railroad patterns. Bears resume at failure swings at this stiff resistance, consequently, attempt to nudge below DMAs, both leading & lagging oscillators indecisive but bearish bias.
The sharp reversal from the 1.2650 resistance region has added conviction to our underlying view that a broader correction back towards 1.2175-1.2050 should be seen. As such, we expected near-term rebounds to be limited, with 1.2475-1.2525 intra-day resistance. Micro term supports ahead of our lower targets lie in the 1.2415/00 and 1.2340/30 regions.
Looking further out, the 5-wave rally off the lows increases the potential that 1.15/1.14 was a significant base, completing the long-term cycle from 2007 and 2014. However, medium-term gains are still likely to be capped by 1.33-1.35 for a broader range before heading back to 1.40-1.45 key long-term resistance.
On a broader perspective, hanging man pops at 1.3202 levels to disrupt the last 3 and a half years’ consolidation phase, while bears break-down triangle support (refer monthly chart). The current price tumbles below 7, 21 & 100-EMAs, consequently, the major downtrend resumes and hits multi-years’ lows (1.14) as both leading and lagging oscillators are bearish bias on this timeframe.
Next projected downside levels are 1.1110-1.1080, the psychological 1.10 region, then 1.0840-1.0800 with 1.0625/1.0590 below there. Bloomberg shows the 1985 low as 1.0520, but we reckon it traded down to 1.0045.
Trading tips:
Contemplating above technical rationale, tunnel spreads are advocated on trading grounds with upper strikes at 1.2530 level and lower strikes at 1.2350 levels (spot reference: 1.2460 level).
Alternatively, activate shorts in GBPUSD futures contracts of May’20 deliveries with an objective of arresting potential slumps.
Where bulls in the minor trend have halted at the stiff resistance levels of 1.2650, where hanging man, shooting star & railroad patterns. Bears resume at failure swings at this stiff resistance, consequently, attempt to nudge below DMAs, both leading & lagging oscillators indecisive but bearish bias.
The sharp reversal from the 1.2650 resistance region has added conviction to our underlying view that a broader correction back towards 1.2175-1.2050 should be seen. As such, we expected near-term rebounds to be limited, with 1.2475-1.2525 intra-day resistance. Micro term supports ahead of our lower targets lie in the 1.2415/00 and 1.2340/30 regions.
Looking further out, the 5-wave rally off the lows increases the potential that 1.15/1.14 was a significant base, completing the long-term cycle from 2007 and 2014. However, medium-term gains are still likely to be capped by 1.33-1.35 for a broader range before heading back to 1.40-1.45 key long-term resistance.
On a broader perspective, hanging man pops at 1.3202 levels to disrupt the last 3 and a half years’ consolidation phase, while bears break-down triangle support (refer monthly chart). The current price tumbles below 7, 21 & 100-EMAs, consequently, the major downtrend resumes and hits multi-years’ lows (1.14) as both leading and lagging oscillators are bearish bias on this timeframe.
Next projected downside levels are 1.1110-1.1080, the psychological 1.10 region, then 1.0840-1.0800 with 1.0625/1.0590 below there. Bloomberg shows the 1985 low as 1.0520, but we reckon it traded down to 1.0045.
Trading tips:
Contemplating above technical rationale, tunnel spreads are advocated on trading grounds with upper strikes at 1.2530 level and lower strikes at 1.2350 levels (spot reference: 1.2460 level).
Alternatively, activate shorts in GBPUSD futures contracts of May’20 deliveries with an objective of arresting potential slumps.