Cable failed yesterday at the 1.6400 resistance, a nice round number and just below the inverted head and shoulder (H&S) pattern with the price target of 1.6421 and the top of the channel at 1.6433. The remainder of my position was profit stopped out at 1.6297.
The low so far this morning is 1.6274, near the .382 retracement of the 1.6061/1.6400 move at 1.6269. There's a little room after that for the correction to continue. On the three-hour chart the RSI has broken its uptrend line but price has yet to follow. This uptrend line is at 1.6253. The .382 retracement of the 1.5985/1.6400 move is at 1.6241. Below this, the next support is at 1.6200/6196. Much below that would suggest to me that Cable is headed back to 1.6000. That would bring it back to the bottom of the channel on the three-hour chart I posted yesterday and potentially be a good entry point for a long position.
Should it rally, it has to overcome 1.6400. Potential price targets are then 1.6500, 1.6556, 1.6600 and 1.6638.
© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
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