20 May Cable Levels To Watch For Future Swing Trade
My previous Cable Swing Long on a pull back from the recent high proved to be a little premature as the correction we’ve seen has been much deeper and ferocious. If only it had been a swing short!
Glancing through the chart now there’s a few things that have caught my eye, though it’s far too early to be sure whether the longer term trend is now back down, or whether we are nearing the bottom of a deep correction ahead of an eventual rally to new highs, so here I’m going to evaluate a few of the facts.
1.5736 has been marked as support/resistance on my 4 hourly chart since November 2011 where I was taking intraday shorts from this level. Now, that same level seems to be offering support but I doubt one test of it is enough for it to have proven itself at this stage:
The Daily chart shows that Cable has produced it’s first higher high since April 2011. Cable has never previously produced a first higher high from a major correction low without later going on to break that high. One thing that does stand out on this chart is the fact that we have both positive and negative MACD divergence all in the same price area. This often means that the next move, whichever the direction, is likely to be a powerful move that can last considerable time. Unfortunately at this stage I can’t tell whether that move is the current leg down that’s already in progress, or whether it will be the subsequent leg up that may follow.
Price currently resides below support, but bang on the 50% retracement level of the 2012 rally. If this holds, it could confirm that the move we’ve seen is part of a healthy correction within a new up trend. If this level and the 61.8% fib levels fail, then Cable is most likely heading much lower in the coming Months:
The Weekly chart is my favourite as it offers some nice levels that will give an insight into Cable’s longer term aspirations. We have price below all major moving averages whilst also having found support on the down trend line originating from 2007. MACD here looks very likely to crossover, so price must find support here to have any chance of avoiding a potentially large leg down. If this Week closes below last Week’s close, then I’d be looking for swing shorts, but if support is found this Week, I’ll be looking for Swing longs!
As for the Quarterly chart, those converging MA’s at the top of the triangle remain an attractive target and looking at the current Quarterly candle so far, if a rally is to materialise then we must be near a turning point right now. If MACD starts turning down now, then any hopes of a leg up will almost certainly be out the window:
In conclusion there is no clear obvious direction though of course the Daily trend is currently down. However, if this down trend is just a correction ahead of a move higher then we are almost certainly nearing the end of that correction. In short, if we start to see strength now there could be great opportunities to enter a new rally in it’s early stages, if we don’t see strength now, then chances are we are at the beginning of a much deeper down trend.
It’s definitely something I will be watching with interest and I’ll post an updated analysis if I choose to take a trade, whichever direction that may be.