Cable has taken a steep fall and has now paused on a confluence of support. Looking for a H4 COT to get involved in the long.
– Long term rising trend line on the daily (goes back to April 2017).
– Significant horizontal support zone (highlighted in green on the daily).
– Monthly S1 pivot.
Cable has sold off heavily due to softer than expected inflation and GDP data. Traders are pricing in a less hawkish BoE, however historically central banks are more interested in trends, with one off data prints far less influential. For this reason, it is my belief that the 6% fall in cable since mid April is a stark overreaction, and the BoE meeting on Thursday could present upside risks to the pair.
If we see an hourly/H4 double bottom close to Thursday’s meeting, it will be worth buying. There is a small possibility we get a move down to the 1.3300 area first, in which case I think we’d see a sharp reversal in oversold conditions. On the upside I’d be targeting the monthly central at 1.3950.