Cable has entered into an interesting trading zone on Friday which could give a strong indication of what we can expect from the pair in the coming weeks.
The area between 1.4350 and 1.44 and been a key zone of support and resistance throughout this year and could once again prove to be the case.
On this occasion, 1.4350 is also the 61.8% retracement of the move from 4 February highs to 29 February lows, while the 55-day simple moving average falls around 1.4370.
With all this in mind, if the pair is still bearish, this could be seen as a logical place for it to rotate back to the downside. Alternatively, a break above here could signal a bottoming out in the pair or at least a broader correction.
At the moment, it’s too early to say which this is but I’ll be paying close attention for reversal signals. This will preferably come in the form of a reversal setup in price action – evening star, bearish engulfing, even a shooting star – and possibly be supported by bearish divergence with the MACD or stochastic.