Sellers are looking to seize back some near-term control in cable
The failure to break above the 100-day moving average is starting to eat away at the upside momentum in cable over the past two weeks. Currently, price is challenging the 100-hour MA (red line) as sellers look to establish some near-term control in the pair.
Fall below that and the near-term bias turns more neutral with the 200-hour MA (blue line) @ 1.2360 the next key level to watch out for.
It has been quite a run for the pound over the past two weeks, bouncing off lows under 1.2000 to highs just above 1.2500. However, without convincing signs to remove risks of a no-deal Brexit or working towards a Brexit deal, it's hard to imagine much sustainable upside.
The break below the key near-term levels highlighted above may just be the straw that breaks the camel's back. In this case, it may spell the end of the upside momentum we have seen since 3 September.
That said, any major downside move isn't likely to follow as well. I reckon price will still sit within the range of 1.20 to 1.25 ahead of October and until we get more clarity about what will happen on 31 October.
But for traders, it's a good technical play to get into as the risks can be clearly defined and limited so as long as you pick your levels accordingly to match your risk appetite. There's nothing wrong with risking a little to make more than a little in a time like this.
