Cable backed away from crucial resistance and is now looking under pressure. We can see our daily stochastics turning bearish from quite overbought levels and this should help us this week to trade lower. We are below the daily pivot evident at 1.6176 and this is another bearish signal, as long as we can stay trading below here and 1.6190.
If we can stay below here, we see further weakness evident with 1.6100, possibly 1.6060/55 coming back into play quite quickly. Here we would cover all shorts, attempt small longs but keep stops tight. As a break below this support we see further weakness down to 1.6010.
If we fail to hold below 1.6190 there are levels of resistance from 1.630/40 through to our major level of 1.6262. Accounting for some stops activated if we get higher, we would sell into strength and only look to reverse on the 3rd break of 1.6285. Only then will the market look a little stronger for 1.6323, but this is an unlikely scenario given the technical indications available.
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