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Cable pulls back to key resistance

By Capital.com News

10:55, 12 September 2023

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Cable (GBP/USD) has been staircasing lower since mid-July and carving out a powerful downtrend on the 4hr candle chart (below).
A key characteristic of this downtrend has been repeated moves down into the lower Keltner channel followed by pullbacks to the 20-day exponential moving average (EMA).
Recent price action has seen cable break to new trend lows last week, pressing down into the lower Keltner channel. True to form, this has been followed by a steady pullback towards the 20-day EMA – an area that coincides with a key area of horizontal resistance.
GBP/USD 4hr Candle Chart

If we zoom in and analyse this week’s price action in more detail (see chart below), we can see that cable formed a bearish pin-bar candle at resistance during yesterday’s session. This price action signals that the market may be starting to succumb to the dominant downtrend.

GBP/USD 4hr Candle Chart Zoomed View

Risk management

ETH/USD

3,430.62 Price
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Short position overnight fee 0.0137%
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Spread 6.00

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19,824.50 Price
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Short position overnight fee 0.0041%
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Spread 1.8

BTC/USD

64,675.50 Price
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Short position overnight fee 0.0137%
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Spread 106.00

XRP/USD

0.63 Price
+6.230% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

Traders looking to trade this pullback could place stops either above yesterday’s pin-bar high, or above the upper Keltner channel on the 4hr chart. For targets, a retest of last week’s lows looks to be logical initial target while secondary targets could be as low as the May swing lows.

In terms of newsflow, this morning’s UK economic data revealed that UK wages in the three months to July grew at their fastest pace on record, with average pay, excluding bonuses, rising by 7.8%, the highest rate since 2001. Total pay, including one-off payments to NHS workers and civil servants, increased by 8.5%, outpacing inflation. This raises concerns for the Bank of England about inflation despite a weaker job market.

Tomorrow’s UK GDP data and U.S. inflation data have the potential to cause outsized volalitty for this currency pair.

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