Cable Drops With a Very Handsome Bearish Setup

By Tomasz Wisniewski|

Published: October 21 2022, 10:22 GMT+0

Cable Drops With a Very Handsome Bearish Setup

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With UK prime minister Liz Truss leaving office, all eyes are on the British pound, which as you may expect, is going down at the end of this week. It’s especially interesting on the GBPUSD, where we do have interesting price action at this moment.

In the long-term, Cable is of course in a strong down trend, highlighted by the red down trendline. In the mid-term, it was not different, with the blue down trendline serving as a closest resistance. In the short-term though, the price was climbing a bit higher, thanks to the momentum gained from the V-shaped reversal from the end of September.

The latest development on the chart was the Head and Shoulders pattern (yellow), which emerged at the end of a nice pennant pattern (blue and green). H&S formation has a black neckline and this neckline was broken today. Breakout of the neckline, along with the green dynamic support is a negative sign and triggers a legitimate sell signal. Bearish sentiment is on as long as the price will stay below the blue line. Breakout above is probable of course but currently, the possibility is rather low.