December 7, 2022

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Slippery slope incoming for cable?

1 min read

It is not a good look on the charts to say the least

Cable is down to a low of 1.3650 to start European trading as the dollar holds firmer once again but the technical significance of the drop is starting to reveal itself.

GBP/USD D1 20-07

The pair now is breaching the double-bottom from the March and April lows and is also falling through the 200-day moving average (blue line) and possibly firmly breaking below said level for the first time since July last year.

Going back to when price action traded back below both the 100 and 200-day moving averages, that was last in late June 2020. That adds to the case for downside momentum.

In the bigger picture, the double-top established close to 1.4200 this year may prove to be more precarious than it looks as we could see an accelerated fall to 1.3500 next before finding some stabilisation in cable.

For now, keep an eye out on risk sentiment and the bond market. Those are the key elements dictating trading sentiment at the moment.

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