FxWirePro: Cable Chartpack – Technicals and FX Derivatives Trade Setup

Cable prices remain subdued at 1.2729 levels, but the intra-day perspective is still volatile. A rally through the 1.2800 - 1.2850 is needed to ease today’s bearish pressure and indicates a broader recovery towards 1.3000 could be foreseen. 

Otherwise, the risks remain for another test through the 1.2660 area of support, with 1.2595 and then 1.2500 the next support regions below.

Medium-term, resistance levels remain in the 1.3170-1.3320 region, with a move through there needed to suggest a sea change, and drive a move towards 1.35-1.37 and potentially back to the Q1 highs in the 1.40-1.45 region again.

On a broader perspective, we have seen slumps below EMAs on shooting star formation at 1.3755 levels, now on the verge of hitting 1 and a half years low and likely to retrace 78.6% Fibonacci levels as both leading and lagging indicators are in tandem with the selling sentiments & bearish EMA crossover.

On the flip side, it is reckoned that the bearish cycle, which started back in 2007 at 2.1160 levels, completed at 1.1490. On a multi-year basis, this suggests mean reversion back to 1.50-1.60.

Trade tips:

On daily trading grounds, at spot reference: 1.2731 levels, we advocate buying boundary binary strategy, using upper strikes at 1.2797 and lower strikes at 1.2697 levels. The strategy is likely to fetch leveraged yields as long as the underlying price remains between above strikes on the expiration.

Alternatively, one can initiate shorts in futures contracts of mid-month tenors with a view to arresting potential downside risks. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly GBP spot index is flashing 12 (which is mildly bullish), while hourly USD spot index was at 126 (highly bullish) while articulating (at 11:06 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex