Last Tuesday’s failure by cable to take out the 1.5818 resistance resulted in a down candle on high volume, which when it was combined with the previous day’s bullish candle on very high volume gave us a two bar reversal (aka a shooting star), and the first signal that cable’s preceding move away from the volume point of control region was likely to fail. This view was also validated by the volume which accompanied the shooting star, and a further clear signal of weakness to come.
Against this backdrop Wednesday’s sharp 267 pip sell off in cable came as no surprise with the pair also moving firmly below the VPOC to close out at 1.5463 on the session.
The bearish sentiment was cable continued for the remainder of the week, as the pair closed out August 1.5390.
The start of the new trading week saw cable once again come under pressure, on relatively low volume, but this is easily explained as Monday was a national holiday here in the UK.
And so to yesterday’s trading session where once again cable attempted to rise as the pair hit a high of 1.5408 before falling back once again to close out the session on a down candle with a deep upper wick at 1.5303. Yesterday’s volume was supportive of the bearish picture and in line with the price action.
In today’s trading cable has been attempting to form a base at the 1.5264 price point on reasonably volume. However, this price level also coincides with a high volume node on our volume point of control, not only the daily chart, but also across the faster time frames which is the reason why bearish sentiment for cable appears to have stalled.
For cable the current pause is likely to herald the start of a minor reversal in fortune, as evidenced by today’s candle where (to date) the high volume node continues provide a strong platform of support along with buying volume. Potential upside targets extend from 1.5329 to 1.5339 which need to be taken out for this current reversal to take hold.