GBPUSD
Cable broke lower yesterday, and therefore we were saved by the little skin of our teeth and we remain in the short position....I am a great believer as I said in weekly pattern taking precedence over daily ones and this bearish flat /pennant we are seeing unfold is a bearish one...these continuation patterns can wrong foot you sometimes...but you need to be aware of them...because they do go counter trend...and this is what makes the day trader unsure...because he sees the market going higher, not understanding that this can and will happen and that it tries to outwit you...
Well as I said yesterday...I missed re-selling at higher levels...but the pattern is unfolding as we speak and the base of this pattern is at 1.2992 this week....Now this is where you cover short Cable positions....However you are looking to be ready to go back into shorts if the market breaks 1.2985...Because we break below here we are also breaking the weekly 61.8 Fib level....and that is a very weak signal....Now if you take a measurement off this weekly continuation pattern...and the base if it does break...you are looking at 1.2662 quite quickly...and this is where is market becomes interesting....
It could provide a Double Base ....but this would be short lived and we wold still be selling into it...and it should then reach lower to 1.2490 ish....Now if you want to go really technical you could measure the base of the continuation pattern and that gives you a target on Cable of just about 1.1962....so you can see that the downside scope is quite vast...We know we have made a top at 1.44...and this action we have seen unfolding after this top was formed has not been positive for Cable....Use these patterns in conjunction with your technical indicators which are just beginning to point lower on the weekly chart...
This market is in a sell rallies mode...don't fight it...go with it...and know that 1.3220/30....is the top of any rally we would see this week....
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