Interesting action currently being seen on cable...

FX:GBPUSD   Pound British/Dolar U.S
Weekly gain/loss: -0.52%
Weekly closing price: 1.3317

After shaking hands with the weekly channel resistance extended from the high 1.2673 a few weeks back, the British pound has displayed signs of weakness. Further losses from this area could eventually see the pair complete a weekly AB=CD (see black arrows) 127.2% ext. point at 1.2882, which happens to intersect beautifully with a weekly channel support etched from the low 1.1986.

Before weekly price reaches this point, nevertheless, the technical picture on the daily timeframe shows immediate support in view at 1.3279: a broken daily Quasimodo line that unites with a daily trendline support taken from the low 1.2108. A violation of this zone would likely place the daily support area at 1.3058-1.2979 in the firing range.

A quick recap of Friday’s action on the H4 timeframe shows that the GBP plunged lower on negative sentiment going into London trade. After ripping through multiple H4 tech supports, the pair bottomed just ahead of the 1.33 handle at the close. 1.33, as you can probably see, is an interesting barrier. A few pips below this line is November’s opening level at 1.3290, and a few pips below that sits the noted daily support. By itself, these three lines (green H4 zone) form strong support. Also of particular interest, however, is the H4 AB=CD (black arrows) 127.2% Fib ext. point seen at 1.3243.

Market direction:

While 1.3279/1.33 stands a reasonable chance of bouncing price action higher this week, remembering where weekly price is trading from is vital! What’s more, one would also do well to note the H4 AB=CD formation, since this could pull H4 price beyond the H4 green area – anyone smelling a potential fakeout here? Therefore, waiting for additional candle confirmation to form around the green H4 zone might be a better route to take. Should one manage to pin down a trade from this region, expect selling pressure to reside around October’s opening level seen at 1.3367.

Data points to consider: No high-impacting events scheduled on the docket.

Areas worthy of attention:

Supports: 1.33 handle; 1.3290; 1.3279; 1.3243; 1.2882; 1.3279; daily trendline support taken from the low 1.2108.
Resistances: 1.3367.

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