Cable hourly chart
Cable has breached an inverted head and shoulder formation on the hourly chart.
- The breach of the formation by itself presents an upside target of 1.4165 levels. That is also the 23.6% retracement of 1.5230-1.3835.
- Plus, the breakout target sits just above 1.4154 (38.2% of 1.4669-1.3835)
So the area around 1.4154-1.4165 is likely to be protected by offers.
The spot currently trades around 1.4085, but the odds of the pair extending gains tomorrow in European session to 1.4165 entirely depend on the UK services PMI report.
UK manufacturing and construction PMI reports were disappointment. Still, sterling managed to take out key levels of 1.4032, 1.4079. This means two things –
- The technical situation (oversold GBP) is weighing over macros
- Corrective rally could become more intense if the services PMI surprises on the higher side
Let us see if the spot does manage to hold on to gains. Going purely by the charts, the spot could move back to 1.40 levels ahead of the UK services PMI report.