There are a number of stops starting to build either side of 1.5930 and 1.5830 in cable, with the downside looking likely to be tested first.
Cable is currently trading just below the 50 Fibonacci level at 1.5863, after trading 40 odd pips above this level late last week the market has failed on two occasions now to close above the 50 Fibonacci level on a daily bases and is running the risk of a significant correction.
GBPUSD Daily
I had mentioned in last week's analysis on cable that the market was likely to find support on the 1:1 (Purple) and 23.6 Fibonacci level that coincided at 1.58350. Cable did find plenty of buying interest on the 1:1 (Purple) during last Fridays trading session and continued to find buyers in early Asian trade with the market 75 pips above the 1:1 support level at one point. However, selling has now been seen in early European trade with the bears looking to target stops below the 1:1 (Purple) support at 1.5830. There are still a number of important support levels on the downside in the form of a 1:1 (Yellow) at 1.5815 and a 1:1 (Light blue) at 1.5792 that the bears will need to overcome before we see the momentum pick up on the downside.
The bulls still remain in control at this point and any solid buying seen on the support levels mentioned above could see a push for the stops that are likely sitting above 1.5930 high.
GBPUSD M30
* A 1:1 refers to a current correction being equal in length to a prior correction
