Today’s reversal in cable has once again taken the pair back to the VPOC (volume point of control) support which sits in the 1.5573 price region. This price area is where cable has been rotating since early July, and despite what appeared to be a decisive break away on Monday when cable touched a high of 1.5803, yesterday’s down candle has had the effect of creating a classic two bar reversal. Therefore, no surprise to see the resulting fall in today’s trading session where cable has fallen over 200 pips.
Today’s price action has not only taken cable below the VPOC for the first time since early August but also seen a break through the 100 ma, and with today’s move supported with good volume the next stop for cable would appear to be 1.5424 on the daily chart.
Moving to the hourly chart cable has found some good support at 1.5466, a price point first hit by a volatility candle earlier in the session. And with no follow through cable may simply consolidate from here as the Asian session gets underway.
The hourly CSI chart also gives us a strong clue that this may also be the point at which we can expect a reversal higher for the pair as the British pound (yellow line) is shown as oversold while the US dollar (the red line) is very much overbought in this time frame.
In the current set up for cable there may well be an opportunity to take some pips to the long side, given the extent of today’s fall. However, this will be counter to the bearish sentiment which appears to have taken hold on the daily chart.