Interesting price action brewing on Cable!

FX:GBPUSD   British Pound / U.S. Dollar
259 0 1
Early on in yesterday’s trade an unrelenting squeeze to the upside took place reaching highs of 1.5412 on the day. Consequent to this recent advance, offers at 1.5256-1.5294 and also 1.5300 were taken out. It was only once price connected with 1.5400 mid-ways through the London session did we see things begin to calm down.

The overall structure of this pair is currently screaming SHORT to us right now. Here’s why:

• 4hr action shows price not only trading at psychological resistance 1.5400, but is also flirting with the 38.2% Fibonacci barrier around the 1.5409 mark.
• Price on the daily timeframe is now kissing the underside of daily supply given at 1.5435-1.5384.
• On the weekly timeframe , we can see that trade is lurking only fifty pips below a weekly swap (resistance) barrier coming in at 1.5451.

The above points certainly give a strong bearish tone to this market despite the recent two days of buying. However, here are some points to consider before selling this market:

• Granted, price is currently trading around daily supply (see above), but just above it, the aforementioned weekly swap (resistance) level lies in wait. Anyone smell a fakeout brewing?
• Price action at 1.5400 is not exactly what we’d label credible at the moment. In fact, considering that there is little in the way of support below current price, we would have expected more red candles to paint.

With the above taken into account, we are going to continue watching for lower timeframe selling confirmation around 1.5400. In the event that this level fails to hold, we’ll then cast our attention to the mid-level number 1.5450 which, as you know, is also the aforementioned weekly swap (resistance) level!

Levels to watch/ live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1.5400 (Stop loss: dependent on where one confirms this level) 1.5450 (Stop loss: dependent on where one confirms this level).

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